<SUBMISSION>
<ACCESSION-NUMBER>0001084961-03-000009
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20021231
<FILING-DATE>20030328
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ENCORE CAPITAL GROUP INC
<CIK>0001084961
<ASSIGNED-SIC>6153
<IRS-NUMBER>481090909
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>000-26489
<FILM-NUMBER>03622323
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>5775 ROSECOE COURT
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92123
<PHONE>8007590327
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>5775 ROSCOE COURT
<CITY>SAN DIEGO
<STATE>CA
<ZIP>92123
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MIDLAND CORP OF KANSAS
<DATE-CHANGED>19990423
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MCM CAPITAL GROUP INC
<DATE-CHANGED>19990430
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>form10k_2002.htm
<DESCRIPTION>FORM10K_2002
<TEXT>

<HTML>
<head>
<title>form10k_2002
</title>
</head>
<BODY>

<HR SIZE=4 NOSHADE>
<center>
<table width=85% border=0 cellpadding=0 cellspacing=0>
<tr><th colspan=2><font size=2> UNITED STATES</font></th></tr>
<tr><th colspan=2><font size=5> SECURITIES AND EXCHANGE COMMISSION</font></th></tr>
<tr><th colspan=2><font size=2> WASHINGTON, D.C. 20549</font></th></tr>
<tr><th colspan=2> <hr width=35% noshade color=black><br></th></tr>
<tr><th colspan=2></th></tr>
<tr ><th colspan=2><font size=3> FORM 10-K<br><br></font></th></tr>
<tr><th><font size=2>(Mark One)</font></th></tr>
<tr><th colspan=2><font size=3> [&nbsp;X&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)</font></th></tr>
 <tr><th colspan=2><font size=3>OF THE SECURITIES EXCHANGE ACT OF 1934<br><br></font></th></tr>
<tr><th colspan=2><font size=2>For the fiscal year ended December 31, 2002 or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;<br><br></font></th></tr>
<tr><th colspan=2><font size=3></font></th></tr>
<tr><th colspan=2><font size=3> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[&nbsp;&nbsp;&nbsp;&nbsp; ]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE </font></th></tr>
<tr><th colspan=2><font size=3>SECURITIES EXCHANGE ACT OF 1934&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br><br></font></th></tr>
<tr><th colspan=2><font size=2>For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>  to <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>.<br><br></font></th></tr>
<tr valign=bottom><th colspan=2><font size=3>Commission File Number 000-26489<br><br></font><HR width=25% align=center color="black" SIZE=1 NOSHADE></th></tr>
<tr><th colspan=2><font size=5>ENCORE CAPITAL GROUP, INC.</font></th></tr>
<tr><th colspan=2><font size=1>(Exact name of registrant as specified in its charter)<br><br><br></font><HR width=25% align=center color="black" SIZE=1 NOSHADE></th></tr>
<tr><th width=50%> <font size=2> <b>                       Delaware </b></font></th>                                  <th width=50%>  <font size=2>        48-1090909</font><br></th></tr>
 <tr><th>  <font size=1>           (State or Other Jurisdiction of</font> </th>                                <th><font size=1>   (IRS Employer Identification No.)</font></th></tr>
<tr><th></th></tr>
<tr valign=top><th ><font size=1>              Incorporation or Organization) </font></th>                               <th><font size=1> <br><br></font></th></tr>
<tr><th colspan=2></th></tr>
<tr><th colspan=2></th></tr>
<tr><th>  <font size=2>                 </font></th><th></th></tr>
<tr><th>  <font size=2> 5775 Roscoe Court,  San Diego, CA                  </font></th>                                     <th>  <font size=2>    92123</font></th></tr>
<tr valign=top><th width=50%><font size=1>          (Address of Principal Executive Offices)</font> </th>                            <th valign=middle width=50%> <font size=1>   (Zip code)<br><br></font></th></tr>
<tr><th></th><th></th></tr>
<tr><th colspan=2>  <font size=2> (877) 445 - 4581</font></th></tr>
<tr><th colspan=2> <font size=1> (Registrant's Telephone Number, Including Area Code)<br><br></font></th></tr>
<tr><th colspan=2> <font size=3> MCM Capital Group, Inc. </font> <br><br></th></tr>
<tr><th colspan=2></th></tr>
<tr><th colspan=2></th></tr>
<tr><th colspan=2> <font size=1> (Former name, former address and former fiscal year,</font></th></tr>
<tr><th colspan=2> <font size=1> if changed since last report)<br><br></font></th></tr>
<tr><th colspan=2><HR width=25% align=center color="black" SIZE=1 NOSHADE> </th></tr>
<tr><th colspan=2></th></tr>
<tr><th colspan=2></th></tr>
</table></center>
<P align="center"><FONT size="2">Securities registered pursuant to Section 12(b) of the Act: None<BR>
Securities registered pursuant to Section 12(g) of the Act:
</FONT></p>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Common Stock, $.01 Par Value Per Share  </font><br>          <FONT FACE="Times New Roman, Times, Serif" SIZE=2>(<b>Title of Class</b>)</font></P>


 <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  Indicate  by check  mark  whether  the  registrant:&nbsp;  (1)&nbsp; has filed  all  reports  required  to be filed by  Section  13 or 15(d) of the
Securities  Exchange Act of 1934 during the preceding 12 months (or for such shorter  period that the  registrant  was required to file
such reports), and &nbsp;(2)&nbsp; has been subject to such filing requirements for the past 90 days.  Yes [X]  No [&nbsp;&nbsp;]</font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation  S-K is 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 this Form 10-K or any amendment to this Form 10-K.  [&nbsp;&nbsp;] </font></p>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
  Yes [&nbsp;&nbsp;]  No [X]</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The aggregate market value of the voting stock held by  non-affiliates  of the registrant  totaling  2,117,401 shares was $3,176,102 at
March 18,  2003,  based on the closing  price of the Common  Stock of $1.50 per share on such date,  as reported by the OTC  Electronic
Bulletin Board.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The number of shares of the registrant's Common Stock outstanding at March 25, 2003 was 7,411,132.</font></P>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>
<A NAME="Index"></A>
<P><A HREF="#Itema">Part I</A><br>

<A HREF="#Itemb">Item 1 - Business</A><br>

<A HREF="#Itemc">Item 2 - Properties</A><br>

<A HREF="#Itemd">Item 3 - Legal Proceedings</A><br>

<A HREF="#Iteme">Item 4 - Submission of Matters to a Vote of Security Holders</A><br>

<A HREF="#Itemf">Part II</A><br>

<A HREF="#Itemg">Item 5 - Market for the Registrant&#146;s Common Equity Securities and Related Stockholder Matters</A><br>

<A HREF="#Itemh">Item 6 - Selected Consolidated Financial Data</A><br>

<A HREF="#Itemi">Item 7 - Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A><br>

<A HREF="#Itemj">Item 7A - Quantitative and Qualitative Disclosure about Market Risk</A><br>

<A HREF="#Itemk">Item 8 - Consolidated Financial Statements</A><br>

<A HREF="#Iteml">Report of Independent Auditors, BDO Seidman, LLP</A><br>

<A HREF="#Itemm">Report of Independent Auditors, Ernst&amp; Young, LLP</A><br>

<A HREF="#Itemn">Consolidated Statements of Financial Condition</A><br>

<A HREF="#Itemo">Consolidated Statements of Operations and Comprehensive Income (Loss)</A><br>

<A HREF="#Itemp">Consolidated Statements of Stockholders&#146; Equity (Deficit)</A><br>

<A HREF="#Itemq">Consolidated Statements of Cash Flows</A><br>

<A HREF="#Itemr">Notes to Consolidated Financial Statements</A><br>

<A HREF="#Itemx">Item 9 - Changes in and Disagreements with Accountants</A><br>

<A HREF="#Itemy">Part III</A><br>

<A HREF="#Itemz">Item 10 - Directors and Executive Officers of the Company</A><br>

<A HREF="#Itemaa">Item 11 - Executive Compensation</A><br>

<A HREF="#Itembb">Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</A><br>

<A HREF="#Itemcc">Item 13 - Certain Relationships and Related Transactions</A><br>

<A HREF="#Itemdd">PART IV</A><br>

<A HREF="#Itemee">Item 14 - Controls and Procedures</A><br>

<A HREF="#Itemff">Item 15 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K</A><br>

<A HREF="#Itemgg">SIGNATURES</A><br>

<A HREF="#Itemhh">Certificate of Principal Executive Officer</A><br>

<A HREF="#Itemii">Certificate of Principal Financial Officer</A><br>

<A HREF="#Itemjj">Consents of Independent Auditors</A><br>

</p>


                                                   <H3 ALIGN=CENTER><FONT size="2">  TABLE OF CONTENTS</FONT></H3>




<TABLE CELLPADDING="5" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="98%" ALIGN="LEFT" ><FONT size="2">Part I</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT size="2">3&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 1 - Business</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">3&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 2 - Properties</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">10&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 3 - Legal Proceedings</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">10&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 4 - Submission of Matters to a Vote of Security Holders</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">11&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Part II</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">12&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 5 - Market for the Registrant's Common Equity Securities and Related Stockholder Matters</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">12&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 6 - Selected Consolidated Financial Data</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">15&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">16&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 7A - Quantitative and Qualitative Disclosure about Market Risk</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">43&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 8 - Consolidated Financial Statements</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">44&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Report of Independent Auditors, BDO Seidman, LLP</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">45&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Report of Independent Auditors, Ernst &amp; Young, LLP</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">46&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Consolidated Statements of Financial Condition</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">47&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Consolidated Statements of Operations and Comprehensive Income (Loss)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">48&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Consolidated Statements of Stockholders&#146; Equity (Deficit)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">49&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Consolidated Statements of Cash Flows</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">50&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Notes to Consolidated Financial Statements</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">52&nbsp;</FONT></TD></TR>
<TR  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 9 - Changes in and Disagreements with Accountants</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">80&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Part III</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">81&nbsp;</FONT></TD></TR>
<TR  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 10 - Directors and Executive Officers of the Company</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">81&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 11 - Executive Compensation</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">84&nbsp;</FONT></TD></TR>
<TR  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">87&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 13 - Certain Relationships and Related Transactions</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">93&nbsp;</FONT></TD></TR>
<TR  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Part IV</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">96&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 14 - Controls and Procedures</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">96&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Item 15 - Exhibits, Financial Statements, Schedules, and Reports On Form 8-K</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">97&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">SIGNATURES</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">101&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Certificate of Principal Executive Officer</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">102&nbsp;</FONT></TD></TR>
<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Certificate of Principal Financial Officer</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">103&nbsp;</FONT></TD></TR>

<TR  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT size="2">Consent of Independent Auditors</FONT></TD>
     <TD ALIGN="RIGHT"><FONT size="2">104&nbsp;</FONT></TD></TR>
</TABLE>
<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<A HREF="#Index">Index</A>
<A NAME="Itema"></A>
<A NAME="Itemb"></A>
                                                    <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Part I</font></H1>

                                                          <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Item 1 - Business</font></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>An Overview of Our Business</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Nature of Business</i></b><br>Encore Capital Group, Inc.
(&#147;Encore&#148; or the &#147;Company&#148;), previously known as MCM Capital
Group, Inc., is a financial services company specializing in the purchase,
collection, restructuring, resale and securitization of receivable portfolios
acquired at deep discounts. The Company is a Delaware holding company whose
principal assets are its investments in its wholly-owned subsidiaries, Midland
Credit Management, Inc. (&#147;Midland Credit&#148;), Midland Funding 98-A
Corporation, Midland Receivables 99-1 Corporation, Midland Acquisition
Corporation, and MRC Receivables Corporation (&#147;MRC&#148;) (collectively
referred to herein as the &#147;Company&#148;). Encore also has a wholly-owned
subsidiary, Midland Receivables 98-1 Corporation, which is not consolidated. The
receivable portfolios consist primarily of charged-off domestic consumer credit
card receivables purchased from national financial institutions, major retail
credit corporations, and resellers of such portfolios. Acquisitions of
receivable portfolios are financed by operations and by borrowings from third
parties. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have extensive
experience in acquiring and servicing charged-off receivable portfolios. For
almost 50 years Midland Credit served as a third-party collection agency. In
1992, we began to focus on acquiring and servicing receivable portfolios using
our own capital. We have historically engaged in the acquisition and servicing
of charged-off loan portfolios originated by credit card issuers and other
financial institutions. In recent years, we primarily acquired charged-off
VISA&#174;, MasterCard&#174;, and private label credit card portfolios issued by
major banks and merchants. We have also purchased limited amounts of charged-off
consumer loans and auto deficiencies. Major credit card issuers often sell a
significant portion of their charged-off, delinquent, non-performing accounts in
order to realize immediate cash proceeds. From January 1, 1997 through December
31, 2002, we purchased in excess of $6.7 billion in receivables, as measured by
the balance charged-off by the originating institutions, paying approximately
$200.9 million for these receivables. During this same period, we collected in
excess of $353.9 million from all owned and managed receivables. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Acquisition of Receivables</i></b><br>We identify receivable
portfolios from a number of sources, including relationships with credit card
issuers, direct solicitation of credit card issuers, resellers, and loan
brokers. We purchase portfolios individually after conducting careful analysis
and due diligence. In 2002, we entered into a forward flow agreement, whereby we
agree to purchase charged-off receivables from the seller on a periodic basis at
a set price over a specified time period. Such agreement is cancellable upon 60
days written notice without penalty. For the year ended December 31, 2002, we
purchased $12.4 million of receivable portfolios under this forward flow
agreement out of $62.5 million total purchases for the year. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We purchase most of our receivables under a $75 million secured financing facility
(the &#147;Secured Financing Facility&#148;) entered into by
MRC, a wholly-owned bankruptcy remote, special purpose entity.    The facility, which expires on December 31, 2004, generally
provides for a 90% advance rate with respect to each qualified portfolio purchased.   Notes issued under the facility are
collateralized by the charged-off receivable portfolios purchased with the proceeds of this financing arrangement.  Each note has a
maturity date not to exceed 27 months after the borrowing date.  Once the notes are repaid and we have been repaid our investment, we
share the remaining cash flows from the receivable portfolios, net of servicing fees, with the lender.</FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Pricing</i></b><br>Charged-off receivable
portfolios are purchased at substantial discounts to the face amount of the
receivable portfolio. We determine the purchase price of a portfolio by
evaluating many different variables, including stratification and analysis of
critical portfolio attributes, such as the number of agencies previously
attempting to collect the receivables in the portfolio, the average balance of
the receivables, number of days since charge off, payments since charge off, the
locations of the debtors and other attributes we deem appropriate. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Once a receivable portfolio
has been identified for potential purchase, we prepare quantitative analyses
based on extracting customer level data from external sources, other than the
issuer, to analyze the potential collectibility of the portfolio. We also
analyze the portfolio by comparing it to similar portfolios previously acquired
and serviced by us. In addition, members of our management perform qualitative
analyses of other matters affecting the value of portfolios, including a review
of the delinquency, charge off, placement and recovery policies of the
originator as well as the collection authority granted by the originator to any
third party collection agencies, and, if possible, by reviewing the
orginator&#146;s recovery efforts on the particular portfolio. After these
evaluations are completed, our Investment Committee, comprised of various
members of our senior management, discusses the findings, decides whether to
purchase and finalizes the price at which we are willing to purchase the
portfolio. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Recovery of Receivables</i></b><br>We focus on maximizing the
recovery of the receivables we acquire. Unlike collection agencies that
typically have only a specified period of time to recover a receivable, as the
owner our collection time horizon is much longer and we have significantly more
flexibility in establishing payment programs. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Once a portfolio has been
acquired, we download all receivable information provided by the originator into
our proprietary account management system and reconcile certain information for
accuracy to the information provided by the seller in the purchase contract. We
review accounts, generally prior to purchase, through external data providers
for ineligible accounts before the contracted warranty expiration and return
those ineligible accounts to the seller for adjustment of the purchase price or
if after purchase, for remedy, either by refund or replacement, as provided for
in the contract. Under applicable law, we send notification letters to obligors
of each acquired account explaining, among other matters, our new ownership and
asking that the obligor contact us. In addition, we notify credit bureaus to
reflect our new ownership. </FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Once receivables are ready
to be worked, members of the Information Technology Department work directly
with the acquisitions group to discuss the specifics of the recent acquisition.
Based upon these discussions, the Information Technology Department tailors our
proprietary account management system to reflect any special characteristics of
the portfolio and our collection strategy. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Collections
Department</I>. The Collections Department is divided into groups each
consisting of a collection manager and group managers supervising approximately
12 account managers. Collection managers and group managers are in constant
communication with management regarding account manager performance. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Receivables with valid
telephone numbers are distributed to the Collections Department. During initial
calls, account managers assess the ability and willingness of the customer to
pay. Account managers are trained to use a friendly, but firm approach. They
attempt to work with customers to evaluate sources and means of repayment to
achieve a full or negotiated lump sum settlement or develop payment programs
customized to the individual&#146;s ability to pay. In some cases, account
managers advise the customer of alternatives to secure financing to pay off
their consumer debt, such as home equity lines of credit. In cases where a
payment plan is developed, account managers encourage customers to pay through
auto-payment arrangements, which consist of debiting a customer&#146;s checking
account on a monthly basis. Account managers are also authorized to negotiate
lump sum settlements within pre-established ranges. Once a settlement or payment
agreement is reached, the account manager monitors the account until it is paid
off. To facilitate payments, in addition to auto-payments, we accept a variety
of payment methods including checks, the Western Union Quick Collect &#174;
system, credit and debit cards, and wire transfers. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If, after the initial
recovery effort, an account manager determines that the customer is willing but
financially unable to pay the debt at that time, we may temporarily suspend our
recovery efforts. At a later date, a new account manager will again assess the
ability and willingness of the customer to pay. If, during the recovery process,
we determine that a customer is able to pay, but unwilling to do so, we refer
the account to our Recovery Department for handling (see &#147;Recovery
Department&#148;). </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Recovery Department.
</I>The Recovery Department may pursue a number of courses of action for
accounts where the customer is able, but unwilling to pay, including appropriate
correspondence, follow up phone calls by the department&#146;s specially trained
account managers and, if satisfactory arrangements are not made with the
customer, the account may be sent to our attorney network, after a
pre-determined time frame. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Legal Outsourcing
Department.</I> We contract with an association of attorneys (the
&#147;Network&#148;) that acts as a clearinghouse to place accounts for
collection with attorneys in most of the 50 states. This Network is managed by
our Legal Outsourcing Department. We generally refer charged-off accounts to the
Network where we believe the related debtor has sufficient assets to repay the
indebtedness and has to date been unwilling to pay. In connection with our
agreement with the Network, we advance certain out-of-pocket court costs. We
capitalize these costs in our consolidated financial statements and provide a
reserve for those costs that we believe will be ultimately uncollectible. We pay
a fee to the respective attorneys based on an established fee schedule, as
further defined in our agreement with the Network. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Balance Transfer
Strategy</I>. During 2001, we added a new settlement option through an
arrangement with a major credit card company. Selected debtors are given the
option of transferring the balance of their account to a new card issued by the
credit card company. We receive predetermined settlement amounts from the credit
card company for each account successfully balance-transferred. We retain the
ownership of and the ability to collect on the charged-off accounts that the
card issuer has solicited until a successful balance-transfer has occurred. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Sale of Accounts
Strategy. </I>Periodically we evaluate our portfolios to identify accounts with
profiles that are inconsistent with our collection strategies. We also offer
accounts for sale from newly purchased portfolios. Such accounts are offered for
sale to a network of collection agencies and law firms. A sale is awarded to the
highest qualified bidder. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Periodically bankrupt and
deceased accounts are reported to us. We identify and package such accounts for
sale to a specialized group of collection agencies and law firms. A sale is
awarded to the highest qualified bidder. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Hiring and Training</i></b><br>As of December 31, 2002, we
had 628 full-time employees. Of these employees, there were 12 department heads,
29 department managers, 494 account managers, and 93 administrative personnel.
New account managers at our Phoenix and San Diego facilities undergo a four-week
training program which involves classroom training and on the job training. None
of our employees are represented by a labor union. We believe that our relations
with our employees are good. </FONT></P>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Technology Platform</i></b><br>To facilitate recovery
efforts and operations, we have developed an extensive technology platform
operated on an in-house IBM AS400, including: </FONT></P>


<UL><LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>proprietary account management software;</font>

<LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>wide area network  between our Phoenix and San Diego  operations to facilitate  real-time  data sharing,  back up and disaster
         recovery; and</font>

  <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>state of the art predictive dialing system that supports recovery efforts in the Phoenix and San Diego facilities.</font>
</UL>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our database includes
relevant account information about customers that our account managers need to
facilitate their recovery efforts. Account managers can update the database in
real time while discussing the account with the customer. Updates are backed-up
daily and kept offsite in a fireproof vault. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Legal Department</i></b><br>The Legal Department
manages corporate legal matters, assists the training program, and monitors
collection activity for compliance. As of December 31, 2002, this department
consisted of three full-time attorneys and one full time paralegal. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Legal Department helps
to develop guidelines and procedures for recovery personnel to follow when
communicating with a customer or third party during our recovery efforts. The
department assists our training department in providing employees with extensive
training on the Fair Debt Collection Practices Act (&#147;FDCPA&#148;) and other
relevant laws. In addition, the Legal Department researches and provides
collection and recovery personnel with summaries of state statutes so that they
are aware of applicable time frames and laws when attempting to recover an
account. It meets with other departments to provide legal updates and to address
any practical issues uncovered in its review of files referred to the
department. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Competition</i></b><br>The consumer credit
recovery industry is highly competitive. We compete with a wide range of
third-party collection companies and other financial services companies, which
may have substantially greater personnel and financial resources than we do. In
addition, some of our competitors may have signed forward flow contracts under
which originating institutions have agreed to transfer charged-off receivables
to them in the future, which could restrict those originating institutions from
selling receivables to us. Competitive pressures affect the availability and
pricing of receivable portfolios, as well as the availability and cost of
qualified recovery personnel. In addition to competition within the industry
focused on the purchase and servicing of charged-off debt, traditional
contingent agencies and in-house recovery departments remain principal recovery
solutions employed by most issuers. We believe some of our major competitors,
which include companies that focus primarily on the purchase of charged-off
receivable portfolios, have continued to diversify into third party agency
collections and into offering credit card and other financial services as part
of their recovery strategy. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>When purchasing
receivables, we compete primarily on the basis of the price paid for receivable
portfolios, the availability of funding for prospective portfolios, and the
quality of services that we provide. There continues to be consolidation of
issuers of credit cards, which have been a principal source of receivable
purchases. This consolidation has limited the sellers in the market and has
correspondingly given the remaining sellers increasing market strength in the
price and terms of the sale of credit card accounts. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Trade Secrets and Proprietary Information</i></b><br>We believe several
components of our computer software are proprietary to our business. Although we
have neither registered the software as copyrighted software nor attempted to
obtain a patent related to the software, we believe that the software is
protected as our trade secret. We have taken actions to establish the software
as a trade secret, including informing employees that the software is a trade
secret and making the underlying software code available only on an as needed
basis. In addition, people who have access to information we consider
proprietary must sign confidentiality agreements. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Government Regulation</i></b><br>
In a number of states we
must maintain licenses to perform debt recovery services and must satisfy
related bonding requirements. We believe that we have satisfied all material
licensing and bonding requirements. Certain states in which we operate, or in
which we may operate in the future, impose filing or notice requirements on
significant stockholders. For example, Maryland requires that we advise them of
the identities of the beneficial holders of 10% or more of the voting securities
of the licensee. We believe we are in compliance with all material
government regulations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The FDCPA and comparable
state statutes establish specific guidelines and procedures, which debt
collectors must follow when communicating with customers, including the time,
place and manner of the communications. It is our policy to comply with the
provisions of the FDCPA and comparable state statutes in all of our recovery
activities, even though we may not be specifically subject to these laws. Our
failure to comply with these laws could have a material adverse effect on us if
they apply to some or all of our recovery activities. The relationship between a
customer and a credit card issuer is extensively regulated by federal and state
consumer protection and related laws and regulations. While we are not a credit
card issuer, these laws affect some of our operations because the majority of
our receivables were originated through credit card transactions. In addition to
the FDCPA, significant federal laws applicable to our business include the
following: </FONT></P>

<UL><LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Truth-In-Lending Act;</font>
       <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Fair Credit Billing Act;</font>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Equal Credit Opportunity Act;</font>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fair Credit Reporting Act;</font>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Electronic Funds Transfer Act;</font>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gramm - Leach - Bliley Act; and</font>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Regulations that relate to these acts.</font>
</UL>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Additionally, there are
comparable statutes in those states in which customers reside or in which the
originating institutions are located. State laws may also limit the interest
rate and the fees that a credit card issuer may impose on its customers. The
laws and regulations applicable to credit card issuers, among other things,
impose disclosure requirements when a credit card account is advertised, when it
is applied for and when it is opened, at the end of monthly billing cycles, and
at year-end. Federal law requires, among other things, that credit card issuers
disclose to consumers the interest rates, fees, grace periods, and balance
calculation methods associated with their credit card accounts. Under current
laws, customers are entitled to have payments and credits applied to their
credit card accounts promptly, to receive prescribed notices, and to require
billing errors to be resolved promptly. Some laws prohibit discriminatory
practices in connection with the extension of credit. If the originating
institution fails to comply with applicable statutes, rules, and regulations, it
could create claims and rights for the customers that would reduce or eliminate
their obligations under their receivables, and have a possible material adverse
effect on us. When we acquire receivables, we generally require the originating
institution to contractually indemnify us against losses caused by its failure
to comply with applicable statutes, rules, and regulations relating to the
receivables before they are sold to us. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The laws described above,
among others, may limit our ability to recover amounts owing with respect to the
receivables regardless of any act or omission on our part. For example, under
the Federal Fair Credit Billing Act, a credit card issuer, but not a merchant
card issuer, is subject to all claims other than tort claims and defenses
arising out of certain transactions in which a credit card is used. With some
exceptions, claims or defenses become subject to the Federal Fair Credit Billing
Act when the obligor has made a good faith attempt to obtain satisfactory
resolution of a disagreement or problem relative to the transaction, the amount
of the initial transaction exceeds $50, and the place where the initial
transaction occurred was in the same state as the customer&#146;s billing
address or within 100 miles of that address.
As a purchaser of credit card receivables, we may acquire receivables subject to
legitimate defenses on the part of the customer, which could prevent us from
collecting on these receivables. The statutes further provide that, in some
cases, customers cannot be held liable for, or their liability is limited with
respect to, charges to the credit card account that were a result of an
unauthorized use of the credit card. There can be no assurance that some of the
receivables we service were not established as a result of unauthorized credit
card use, and, accordingly, we may be unable to recover all or a portion of the
amount of these receivables. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Additional consumer
protection laws may be enacted that would impose requirements on the enforcement
of and recovery on consumer credit card or installment accounts. Any new laws,
rules, or regulations that may be adopted, as well as existing consumer
protection laws, may adversely affect our ability to recover the receivables. In
addition, our failure to comply with these requirements could adversely affect
our ability to enforce the credit card receivables. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>



<A HREF="#Index">Index</A>
<A NAME="Itemc"></A>

                                                       <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 2 - Properties</font></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We service our customers
from two servicing facilities. Our largest servicing facility is located in
Phoenix, Arizona. Designed to accommodate up to 800 employees, at December 31,
2002, the facility housed 319 employees. We lease the Phoenix facility, which is
approximately 62,000 square feet, for $28,000 per month; this lease expires in
2008. We also lease a facility in San Diego, California, which contains not only
additional collection operations, but also serves as corporate headquarters.
This facility is approximately 33,000 square feet and is designed to accommodate
up to 400 employees. It housed 309 employees at December 31, 2002. The San Diego
facility lease payment totals $45,505 per month and the lease expires in 2004. </FONT></P>


<A HREF="#Index">Index</A>
<A NAME="Itemd"></A>
                                                    <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 3 - Legal Proceedings</font></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Fair Debt Collection
Practices Act (&#147;FDCPA&#148;) and comparable state statutes may result in
class action lawsuits, which can be material to our business due to the remedies
available under these statutes, including punitive damages. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In February 2001, in the
Superior Court of the State of Arizona, County of Maricopa, our subsidiary
Midland Credit Management, Inc. and two of its wholly owned subsidiaries,
Midland Funding 98-A Corporation and Midland Receivables 99-1 Corporation, filed
a lawsuit against MBNA America Bank, NA (&#147;MBNA&#148;). We have alleged,
among other things, fraud, fraudulent inducement, breach of contract and
negligent misrepresentation arising out of the acquisition of charged-off
receivables purchased from MBNA between September 1999 and February 2000. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On March 21, 2003,  Midland Credit, Midland Funding
98-A Corporation and Midland Receivables 99-1 Corporation, entered into a
settlement  agreement  with MBNA in connection  with the  aforementioned  lawsuit  filed against MBNA (see Note 14 to the  consolidated
financial statements).  Pursuant to the terms of the settlement, MBNA is to pay Midland Credit $11.1 million on or before April 4, 2003
in full and complete  satisfaction of the claims. The net proceeds currently  estimated to be approximately $7.9 million,  which is net
of litigation  expenses and attorneys fees, will be used to repay holders of the Warehouse Facility and securitization  99-1 (see Notes
5 and 7 to the consolidated financial statements).  To date, the Company has not received payment. Upon  receipt of the  settlement,  the
Company  will record a net gain,  which will be  comprised of the net proceeds as reduced by the
remaining carrying value of the related receivable portfolios at that date.</font> </P>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On May 28, 2002, a
complaint was filed by plaintiff Lana Waldon in the United States District Court
for the Northern District of Texas against the Company&#146;s wholly-owned
subsidiary Midland Credit Management, Inc. and two unaffiliated financial
institutions, in which the plaintiff purports to assert claims for alleged
violations of the Fair Debt Collection Practices Act, the Texas Debt Collection
Act and the Texas Deceptive Trade Practices Act on behalf of a class of Texas
residents allegedly similarly situated. Generally, the complaint alleges that
mailings related to a credit card balance transfer program are deceptive and
misleading. The complaint seeks actual, statutory and treble damages in an
amount to be determined, together with pre-judgment and post-judgment interest,
attorneys&#146; fees, and preliminary and permanent injunctions enjoining
defendants from making offers or distributing materials substantially similar to
the mailings that are the subject of the complaint, plus certain other relief.
The defendants have filed motions to dismiss but no hearing on the motions has
been scheduled. No motion for class certification has yet been filed. It is
expected that the plaintiff will seek to expand the putative class to a
nationwide class with respect to the non-local claims asserted, if the current
complaint survives dismissal. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There are a number of
additional lawsuits or claims pending or threatened against the Company. In
general, these lawsuits or claims have arisen in the ordinary course of business
and involve claims for actual damages arising from alleged misconduct of our
employees or alleged improper reporting of credit information by the Company.
Although litigation is inherently uncertain, based on past experience, the
information currently available, and the possible availability of insurance
and/or indemnification from originating institutions in some cases, we do not
believe that the currently pending and threatened litigation or claims will have
a material adverse effect on the Company&#146;s consolidated financial position
or results of operations. However, we are not currently in a position to
determine whether the resolution of pending or threatened litigation or claims
will ultimately have a material effect on the Company&#146;s financial position
or results of operations in any future reporting period. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We do not believe that
contingencies for ordinary routine claims, litigation and administrative
proceedings and investigations incidental to our business will have a material
adverse effect on its consolidated financial position or results of operations. </FONT></P>


<A HREF="#Index">Index</A>
<A NAME="Iteme"></A>

                                  <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 4 - Submission of Matters to a Vote of Security Holders</font></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On October 24, 2002, the
Company held its Annual Meeting of Stockholders. The matters acted upon by the
stockholders at that meeting were reported in the Company&#146;s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2002. </FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<A HREF="#Index">Index</A>
<A NAME="Itemf"></A>


                                                              <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Part II</font></H1>
<A NAME="Itemg"></A>
                    <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 5 - Market for the Registrant's Common Equity Securities and Related <br>Stockholder Matters</font></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our common stock has traded
on the OTC Electronic Bulletin Board under the symbol &#147;ECPG.OB&#148; since
the first quarter of 2002 when the Company&#146;s name changed to Encore Capital
Group, Inc. Prior to that the Company traded on the OTC Electronic Bulletin
Board under the sumbol &#147;MCMC.OB.&#148; </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Trading in the
Company&#146;s stock is sporadic with relatively low volume of shares traded.
There can be no assurance that the trading market will provide stockholders with
the ability to sell their shares. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The high and low closing
sales prices of the common stock, as reported by Nasdaq and the OTC Electronic
Bulletin Board for each quarter during the Company&#146;s two most recent fiscal
years are reported below: </FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Market Price</u></FONT></TH>
     <TH COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>High</u></FONT></TH>
     <TH align=right COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Low</u></FONT></TH>
     <TH COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="24%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Fiscal Year 2001</u></FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="19%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">First Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.58</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.34</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Second Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$1.20</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.36</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Third Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.60</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.31</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fourth Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.63</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.21</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Fiscal Year 2002</u></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">First Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.80</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.26</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Second Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$1.01</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.70</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Third Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$1.20</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.45</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fourth Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$1.60</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.75</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
</TABLE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The closing  price of Encore&#146;s  common  stock on March 18, 2003 was
$1.50 per share and there were 816 holders of record,  including 64
NASD registered broker/dealers which hold 2,714,314 shares on behalf of their clients.

 </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Securities Issuances</i></b><br>On February 22, 2002,
certain existing stockholders and their affiliates made an additional $5.0
million purchase of 1 million shares of our Series A Senior Cumulative
Participating Convertible Preferred Stock (the &#147;Series A Preferred
Stock&#148;) at a price of $5.00 per share in a private placement exempt from
registration pursuant to Regulation D under the Securities Act of 1933. (See
Note 2 to the consolidated financial statements.) </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The investment by the
stockholders was approved by the Company&#146;s board of directors, following
the recommendation of a special committee consisting of the Company&#146;s
independent director formed specifically for the purpose of evaluating and
considering the transaction. The special committee was advised by an independent
financial advisor and by independent legal counsel. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On December 20, 2000, MRC,
a wholly-owned bankruptcy-remote, special-purpose entity, entered into a $75
million secured financing facility (the &#147;Secured Financing Facility&#148;),
which expires on December 31, 2004. In connection with the execution of the
Secured Financing Facility, as discussed in <I>&#147;Liquidity and Capital
Resources&#148;</I> in Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations, Encore issued warrants to the institutional
investor for the purchase of up to 621,576 shares of our common stock at $1.00
per share. Of the warrants issued, 155,394 were exercisable immediately, and the
remaining warrants became exercisable in three equal tranches triggered at the
time we have drawn an aggregate of $22.5 million, $45.0 million and $67.5
million against the facility, respectively. The first tranche was triggered
during the third quarter of 2001, the second tranche was triggered in the first
quarter of 2002, and the final tranche was triggered in the third quarter of
2002, thus warrants representing 310,788, and 621,576 shares of our common stock
were exercisable under this facility at December 31, 2001 and December 31, 2002,
respectively. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
execution of the $2.0 million revolving credit agreement on October 31, 2000, as
discussed in <I>&#147;Liquidity and Capital Resources&#148;</I> in
Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations, the Company issued warrants to purchase 50,000 shares at $0.01 per
share. Additional warrants totaling 200,000 were issued in 2001 to extend the
funding period under the line of credit. As a result of these issuances,
warrants to purchase an additional 5,241 shares were issued to the holder of the
$10 million unsecured Senior Notes and warrants to purchase 1,275 shares were
issued to the affiliated party that guaranteed the Senior Notes pursuant to the
anti-dilution provisions of the applicable warrant agreements. The Credit and
Security Agreement dated as of October 31, 2000, as amended, terminated on
December 31, 2001. No funds were ever drawn under this agreement, and no
indebtedness was outstanding at the time of such termination. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On January 12, 2000, we
issued $10.0 million in principal amount of 12% Series No. 1 Senior Notes (the
&#147;Senior Notes&#148;) to an institutional investor (see <I>&#147;Senior
Notes&#148;</I> in Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations). In connection with the issuance of the
Senior Notes, we issued warrants to purchase up to 428,571 shares of our common
stock at $0.01 per share (subject to adjustment) to the same institutional
investor in a private placement exempt from registration under Section 4(2) of
the Securities Act of 1933. We also issued warrants to purchase 100,000 shares
of our common stock to an affiliated party who agreed to guarantee the Senior
Notes. Both warrant agreements pursuant to which the warrants were issued
contain anti-dilution provisions. This issuance was also exempt from
registration under the Securities Act pursuant to Section 4(2). On February 22,
2002, in a transaction related to the issuance of Series A Preferred Stock, the
holders of the Senior Notes forgave $5.3 million of outstanding debt and reduced
its warrant position by 200,000 warrants. The debt forgiveness was recorded
net of the debt discount related to the warrants cancelled and deferred loan costs totaling $0.7 million in the aggregate.  The
effect of the debt forgiveness was recorded by the Company as a capital contribution since it was facilitated by various equity
holders of the Company through their relationship with the lender resulting from prior investment banking and financial advisory
services rendered to such equity holders by the lender and its affiliates.
 (See <I>&#147;Liquidity and Capital
</I>Resources&#148; at Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations and Note 2 to the consolidated financial
statements.) </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 2000, we also
closed the Securitization 99-1 financing discussed below in <I>&#147;Liquidity
and Capital Resources&#148;</I> in Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations. In our past securitization
transactions, a bankruptcy remote subsidiary issued notes to one or more
institutional investors in a private placement exempt from registration under
Section 4(2) of the Securities Act of 1933. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Dividend Policy</i></b><br>We have never declared or
paid dividends on our common stock and we anticipate that we will retain
earnings to support operations and to finance the growth and development of our
business. Therefore, we do not intend to declare or pay dividends on the common
stock for the foreseeable future. The declaration, payment and amount of future
dividends, if any, will be subject to the discretion of our board of directors
and is also restricted by the provisions of our Series A Preferred Stock. In
addition, the note purchase agreement executed in January 2000 in connection
with the issuance of $10 million in aggregate principal amount of senior
unsecured notes restricts us from paying dividends on common shares while the
Senior Notes are outstanding. We may also be subject to additional dividend
restrictions under future financing facilities. For a more detailed discussion
of this financing, see &#147;<I>Senior Note Financing</I>&#148; in
Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations. Certain of our current financing facilities also require us to meet
and maintain certain liquidity requirements that restrict dividend payments. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Series A Preferred
Stock has a cumulative dividend, payable semi-annually. Until February 15, 2004,
dividends are payable in cash and/or additional Series A Preferred Stock, at the
Company&#146;s option, at the rate of 10.0% per annum. Thereafter, dividends
will be payable only in cash, at a rate of 10.0% per annum. The dividends
payable on August 15, 2002 and February 15, 2003 were paid in cash. The dividend
rate increases to 15.0% per annum in the event of a qualified public offering, a
change of control (each as defined) or the sale of all or substantially all of
the assets of the Company. In the event dividends are not declared or paid, the
dividends will accumulate on a compounded basis. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<A HREF="#Index">Index</A>
<A NAME="Itemh"></A>

                                              <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> Item 6 - Selected Consolidated Financial Data</font></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This table presents
historical financial data of Encore. This information should be carefully
considered in conjunction with the consolidated financial statements and notes
included in this report. The selected data in this section are not intended to
replace the consolidated financial statements. The selected financial data,
(except for &#147;Selected Operating Data&#148; in the table below), as of
December 31, 1998, 1999 and 2000, and for the years ended December 31, 1998 and
1999, were derived from our audited consolidated financial statements not
included in this report. Selected Operating Data are derived from the books and
records of Encore. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selected financial
data, except for Selected Operating Data, as of December 31, 2001 and 2002 and
for the years ended December 31, 2000, 2001 and 2002, were derived from our
audited consolidated financial statements included elsewhere in this report<I>.
(In thousands, except per share and personnel data)</I> </FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=5><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>As of and for the years ended December 31,</u></FONT></TH>
    </TR>
<TR VALIGN="BOTTOM">
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <u>1998</u> </FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u> 1999</u></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>2000</u></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>2001</u></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <u>2002</u></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<b>Revenues</b></FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="14%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Income from receivable portfolios</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;15,952&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;12,860&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;15,434&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32,581&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;80,961&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Income from retained interest</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,836&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,679&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,806&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,707&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Gain on sales of receivable portfolios</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,818&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">57&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Servicing fees and related income</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">105&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,405&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,447&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,458&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,712&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Total revenues</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">26,875&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">28,158&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">36,560&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">47,845&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">90,380&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<b>Expenses</b></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Salaries and employee benefits</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,472&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18,821&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">23,423&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">27,428&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">35,137&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Other operating expenses</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,200&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,479&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,211&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,708&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,934&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Collection legal costs</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">129&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,457&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,028&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,290&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,019&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,458&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,750&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,314&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Restructuring charges</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,388&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Provision for portfolio losses</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20,886&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,049&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">427&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">964&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,154&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,481&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,453&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,389&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">26,283&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">59,649&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">46,824&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">63,915&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Income (loss) before interest, income taxes  &nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;and extraordinary charge</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15,486&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,875&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(23,089)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,021&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">26,465&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Interest and other expenses</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,886)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,960)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,898)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,737)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(18,379)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Income (loss) before income taxes</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;and extraordinary charge</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,600&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(85)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(30,987)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(9,716)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,086&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;(Provision for) benefit from income taxes</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,065)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">34&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,257&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,149)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,703&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Income (loss) before extraordinary charge</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,535&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(51)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(23,730)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,865)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,789&nbsp;</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Extraordinary charge, net of income tax</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">180&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Net income (loss)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,355&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(51)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(23,730)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;(10,865)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13,789&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<b>Net income (loss) per common share:</b></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.49&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;(0.01)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;(3.20)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1.52)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.82&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.47&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;(0.01)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;(3.20)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1.52)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.84&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<b>Average common shares outstanding:</b></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,941&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,989&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,421&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,161&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,339&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,996&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,989&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,421&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,161&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16,459&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Other Financial Data:</b></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Cash flows provided by (used in):</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operations</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,434&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;(3,405)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(15,831)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,853&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24,690&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Investing</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,155&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(59,491)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,399&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(21,773)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(11,158)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Financing</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8,408)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">58,590&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,968&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,444&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(14,192)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<b>Selected Operating Data:</b></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Collections on receivable portfolios</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;(including securitized portfolios)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;15,940&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;34,877&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;66,117&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;83,051&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;148,808&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Purchases of receivable portfolios</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;at face value</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;722,597&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;834,590&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;93,459&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;1,552,559&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;2,805,388&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Purchases of receivable</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;portfolios, at cost</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;24,762&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;51,969&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;4,433&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;39,030&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;62,525&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Total collection personnel at year end</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">379&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">437&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">364&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">433&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">452&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Total employees at year end</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">446&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">585&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">523&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">596&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">628&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;<b>Consolidated Statement of</b></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;<b>Financial Condition Data:</b></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Cash</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,658&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;352&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;888&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,412&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;752&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Restricted cash</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,939&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,468&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,053&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,105&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Investment in receivable portfolios</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,052&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">57,473&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25,969&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">47,001&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">64,168&nbsp;</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Retained interest in securitized receivables</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">23,986&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">30,555&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">31,616&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,926&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,256&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Total assets</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">34,828&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">101,540&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">71,101&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">77,711&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">89,974&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Notes payable and other borrowings</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,005&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">47,418&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">53,270&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">69,215&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">47,689&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Capital lease obligations</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">506&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,262&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,233&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,236&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">344&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Total liabilities</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20,906&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">68,512&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">61,022&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">80,069&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">70,432&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Total stockholders' equity (deficit)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,922&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">33,028&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,079&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,358)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">19,542&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<A HREF="#Index">Index</A>
<A NAME="Itemi"></A>
                   <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations</font></H1>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The information in this
section should be read in conjunction with our consolidated financial statements
and notes to the consolidated financial statements beginning on page 43 and the
Risk Factors beginning on page 35. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Subsequent Event</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On March 21, 2003,  Midland Credit,  a subsidiary of Encore,  and two of Midland  Credit's wholly owned  subsidiaries,  Midland Funding
98-A Corporation and Midland Receivables 99-1 Corporation, entered into a
settlement  agreement with MBNA in connection  with a lawsuit filed against MBNA in the Superior Court of the State of Arizona,  County
of Maricopa, in February 2001 (see Note 14 to the consolidated  financial  statements).  Pursuant to the terms of the settlement,  MBNA
is to pay us $11.1  million on before  April 4, 2003 in full and  complete  satisfaction  of our  claims.  The net  proceeds  currently
estimated to be approximately  $7.9 million,  which is net of litigation  expenses and attorneys fees, will be used to repay holders of
the Warehouse  Facility and  Securitization  99-1 (see Notes 5 and 7 to the Consolidated  Financial  Statements).  To date, we have not
received payment. Upon  receipt of the  settlement,  the Company  will record a net gain,  which will be  comprised of the net proceeds as reduced by the
remaining carrying value of the related receivable portfolios at that date.</font></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Results of Operations</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Year Ended December 31, 2002 Compared to Year Ended December 31, 2001</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Revenues</i></b><br>Total revenues for the
twelve months ended December 31, 2002 were $90.4 million compared to total
revenues of $47.8 million for the year ended December 31, 2001, an increase of
$42.6 million or 89%. The revenue increase is primarily from income from
receivable portfolios, which increased $48.4 million or 148%, to $81.0 million
from $32.6 million for the twelve months ended December 31, 2002 and 2001,
respectively. This increase is primarily the result of a 79% increase in total
collections of $65.8 million from $83.0 million in 2001 to $148.8 million in
2002. This was offset by a decrease in the income from investment in retained
interest of $4.1 million, from $9.8 million for the year ended December 31, 2001
to $5.7 million for the year ended December 31, 2002. The offsetting decrease
results from expected declines in cash collections. This was also offset
by a decrease in servicing fees and other related income of $1.8 million, from
$5.5 million for the year ended December 31, 2001 to $3.7 million for the year
ended December 31, 2002. </FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The $48.4 million increase in income from receivable  portfolios  reflects an overall
increase in total collections  which, in part, is
the result of increased  portfolio  purchase  volumes in 2001 and 2002.  For the twelve months ended December 31, 2002, we acquired new
portfolios  with a face value in excess of $2.8 billion at a cost of $62.5  million.  The majority of these  portfolios  were purchased
utilizing our Secured  Financing  Facility.  These  portfolios  provided  $28.0  million of revenue  during 2002. In 2001, we purchased
portfolios  with a face value of $1.6  billion at a total cost of $39.0  million.  The  portfolios  provided  $38.1  million of revenue
during 2002,  which was an increase from $15.2  million of revenue during 2001.  The Company  acquired  substantially  all the assets of another
financial  services company,  West Capital  Financial  Services (&#147;West Capital&#148;),  in 2000. The portfolios  acquired in the West Capital
transaction  with a face value of $2.4 billion and a cost of $2.0 million  generated  $1.4 million in revenue during 2002 compared with
$4.1 million in 2001, a decrease of $2.7 million.  In line with our  projections,  revenues on all other  portfolios  decreased by $2.5
million during 2002 as compared to 2001.  Furthermore,  certain portfolios that were previously  recorded on a cost recovery basis were
returned to the accretion  method and  accounted  for $0.9 million of the increase in revenue for the twelve months ended  December 31,
2002 (see Notes 4 and 5 to  consolidated  financial  statements).  Lastly,  during 2002, we initiated whole  portfolio  sales.  The net
gain from this initiative totaled $0.7 million, which is reflected in Income from Receivable Portfolios.

</FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2001 and 2002, we
serviced a pool of charged-off consumer accounts on behalf of an unrelated third
party. Servicing fees received under this arrangement were $3.7 million and $5.5
million for the years ended December 31, 2002 and 2001, respectively. In
February of 2003, we returned all exhausted receivables to the owner; however,
we have retained the servicing rights for receivables placed with our attorney
network. As a result of this change, our servicing fee income will decline in
2003. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Total operating expenses</i></b><br>Total operating expenses
were $63.9 million for the year ended December 31, 2002 compared to $46.8
million for the year ended December 31, 2001, an increase of $17.1 million or
36%. This increase in operating expenses reflects a large increase in gross
collections. Gross collections for the year ended December 31, 2002 amounted to
$148.8 million, up 79% or $65.8 million from the $83.0 million of gross
collections for the year ended December 31, 2002. We recorded a provision for
portfolio losses of $1.0 million in the year ended December 31, 2002 related to
the impairment of certain receivable portfolios. </FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The largest component of
total operating expenses is salaries (including bonuses paid to collectors) and
employee benefits which increased by $7.7 million or 28% to $35.1 million for
the year ended December 31, 2002 from $27.4 million for the year ended Decmber
31, 2001. Because collector bonuses are tied to collections, a substantial
portion of the increase is a direct result of increased collections. Despite the
79% increase in collections for the year ended December 31, 2002, the number of
total personnel only increased by 32 as of December&#160;31, 2002 as compared to
December 31, 2001. This reflects efficiencies achieved through refining our
collection channels and improving the quality of our work force. Also included
in salaries in the second quarter of 2002 is a $0.5 million settlement paid to a
former executive officer. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Other operating expenses
increased approximately $2.2 million, or 38%, to $7.9 million for the year ended
December 31, 2002 from $5.7 million for the twelve months ended December 31,
2001. The increase was primarily a result of increased expenses related to
direct mail campaigns for the year ended December 31, 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Collection legal expense
doubled to $11.0 million for the year ended December 31, 2002 from $5.5 million
for the year ended December 31, 2001. The collection legal expense amounts to
40% of collections through this channel, which were $27.6 million for the year
ended December 31, 2002. That compares to collection legal expense for 2001 of
33% of collections, which were $16.3 million for the year ended December 31,
2001. This expense reflects costs associated with the the business channel
dedicated to collecting on accounts that have been determined to be collectible,
but which require tactics other than telephone solicitation . </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>General and administrative
expenses increased to $6.3 million for the twelve months ended December 31, 2002
from $5.7 million for the twelve months ended December 31, 2001. The increase
was primarily a result of increasing insurance costs, which increased $0.6
million from $0.6 million for the year ended December 31, 2001, to $1.2 million
for the year ended December 31, 2002. Depreciation expense remained consistent
at $2.5 million for the twelve months ended December 31, 2002 and 2001. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As a result of increased  portfolio  purchases,  a return to profitability and general industry trends, we perceive we are experiencing
an increase in the number of  collections  related  law suits filed  against  Midland  Credit.  While we do not have  adequate  data to
quantify a trend, such an increase in litigation could lead to an increase in general and  administrative  expenses in future reporting
periods.  See Item 3 &#150; Legal Proceedings. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Other income and expense</i></b><br>For the year ended December
31, 2002, total interest expense including fees and amortization of other loan
costs was $18.6 million on average borrowings for the period of $55.8 million,
resulting in an effective all-in interest rate of 33.3% for the period. The
interest only portion of this total amounted to $4.8 million, for an effective
interest cost of 8.6%. The balance reflects contingent interest through a
sharing of the residual interest paid to the lender under our Secured Financing
Facility.<B> </B>For the year ended December 31, 2001, total interest expense
was $10.9&#160;million on average borrowings of $64.2 million, reflecting an
effective all-in interest rate of 17.0%.<I> </I>The interest only portion of
this total amounted to $4.6 million, for an effective interest cost of 7.0%. The
$7.7 million increase in total interest expense is principally due to the
accrual for the sharing with the lender of residual collections under the
Secured Financing Facility. As discussed in Note&#160;7 to the consolidated
financial statements, we recorded contingent interest expense of $13.0 million
and $2.4 million for the years ended December 31, 2002 and 2001, respectively,
resulting in an increase in contingent interest expense of $10.9 million. </FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Income taxes</i></b><br>For the year ended December
31, 2002, we recorded an income tax benefit of $5.7 million - an effective
benefit of 71% of pretax income. The provision for 2002 reflects the recognition of an income tax
benefit in 2002 resulting from the restoration of a $6.8 million net deferred
tax asset (See Note 8 to the consolidated financial statements). For the year
ended December 31, 2001, we recorded an income tax provision of $1.1 million,
reflecting an effective rate of 12%, which represents the deferred tax impact of
the decrease in the unrealized gain (See Notes 5 and 8 to the consolidated
financial statements). The provision for 2001 is a result of our recording a
valuation reserve for our deferred tax assets because of the continuing
uncertainty of the recovery of the tax assets that existed at that time. For the
year ended December 31, 2002, we determined that the utilization of net
operating losses and other deferred tax assets was more likely than not, and
therefore removed all but $0.2 million of the valuation allowance. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Net Income (loss)</i></b><br>Net income for the twelve
months ended December 31, 2002 was $13.8 million compared to a net loss of $10.9
million for the twelve months ended December 31, 2001. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Year Ended December 31, 2001 Compared to Year Ended December 31, 2000</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Revenues</i></b><br>Total revenues for the
twelve months ended December 31, 2001 were $47.8 million compared to total
revenues of $36.6 million for the year ended December 31, 2000, an increase of
$11.2 million or 31%. The increase is primarily from income from receivable
portfolios, which increased $17.2 million or 112%, to $32.6 million from $15.4
million for the twelve months ended December 31, 2001 and 2000, respectively.
This was offset by a decrease in the income from investment in retained interest
of $1.9 million, from $11.7 million for the year ended December 31, 2000 to $9.8
million for the year ended December 31, 2001. The decrease results from expected
declines in future cash collections. This was also offset by a decrease in
servicing fees and other related income of $3.9 million, from $9.4 million for
the year ended December 31, 2000 to $5.5 million for the year ended December 31,
2001. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The increase of $17.2
million in income from receivable portfolios reflects both higher growth in
newly purchased portfolios, the acquisition of certain assets of West Capital
and its related portfolios as of May 22, 2000 and an overall increase in total
collections. For the twelve months ended December 31, 2001, we acquired new
portfolios with a face value in excess of $1.6 billion at a cost of $39.0 million. These portfolios were purchased utilizing our Secured Financing Facility.
These portfolios provided $15.2 million of revenue during 2001. In
2000, we purchased portfolios with a face value of $93.5 million at a total cost
of $4.4 million. The portfolios provided $1.3 million of revenue during 2001,
which was an increase from $0.6 million during 2000. The portfolios acquired in
the West Capital transaction with a face value of $2.4 billion and a cost of
$2.0 million generated $4.1 million in revenue during 2001 compared with $4.2
million in 2000, a decrease of $0.1 million. In line with our projections,
revenues on all other portfolios increased by $0.4 million during 2001 as
compared to 2000. Furthermore, certain portfolios that were previously recorded
on a cost recovery basis were returned to the accretion method and accounted for
$1.5 million of the increase in revenue for the twelve months ended December 31,
2001 (see Notes 4 and 5 to consolidated financial statements). </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The decrease in servicing
fees and related income of $3.9 million, or 42%, reflects the payoff of the 1998
Securitization notes in September 2000 that resulted in the discontinuation of
the related servicing fees at that date. During the twelve months of 2000,
servicing fees related to the 1998 Securitization were $3.7 million and the
amortization of the remaining servicing liability was $1.4 million compared to
no service fees and no amortization of servicing liability for the twelve months
of 2001. All subsequent collections for the 1998 Securitization have been
applied to the retained interest. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The decrease in servicing
fees related to the 1998 Securitization was partially offset by a $1.2 million
increase in servicing fees received by the Company as successor servicer to a
pool of charged-off consumer accounts acquired in May 2000 from West Capital. We
recorded $5.5 million in servicing fees during the twelve months ended December
31, 2001 for the collections on these receivables during that period. Included
in this amount is a $0.8 million non-recurring fee earned for our assistance
with the sale of a component of these receivables. For the year ended December
31, 2000, we recognized $4.3 million in fees associated with collections for
that period. </FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Total operating expenses</i></b><br>Total operating expenses
were $46.8 million for the year ended December 31, 2001 compared to $59.6
million for the year ended December 31, 2000, a decrease of $12.8 million or
21%. We recorded a provision for portfolio losses of $20.9 million in the year
ended December 31, 2000 as a result of impairment of certain receivable
portfolios. During the same period, we also recognized restructuring charges of
$1.4 million. No such provision or restructuring charges were recorded for the
year ended December 31, 2001. Salaries and employee benefits increased by $4.0
million or 17% to $27.4 million for the twelve months ended December 31, 2001
from $23.4 million for the twelve months ended December&#160;31, 2000. Collector
bonuses accounted for most of the increase reflecting the increase in our
collections combined with a change in the compensation package for our
collectors. In 2001, collector compensation was based on a three-month rolling
average for incentive payments and, where appropriate, the base salary was
increased. Previously, collectors were rewarded on a single month basis based on
an individual&#146;s collections in the previous month. The number of
total personnel was 64 fewer as of December&#160;31, 2001 as compared to the
count at May 22, 2000, the date of the West Capital transaction which, the we
believe, reflects efficiencies achieved through improved collection technologies
and a higher quality work force. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Other operating expenses
decreased approximately $0.5 million, or 8%, to $5.7 million from $6.2 million
for the twelve months ended December 31, 2001 and 2000, respectively. Collection
legal expense increased by $5.3 million to $5.4 million for the year ended
December 31, 2001 from $0.1 million for the year ended December 31, 2000. This
increase in collection legal expense reflects costs associated with the
initiation of a new channel for collecting on accounts that have been determined
to be collectible, but which require tactics other than telephone solicitation.
Amounts collected through this channel approximated $7.8 million for the year
ended December 31, 2001. Postage expenses related to direct mail campaigns also
generated an increase of approximately $0.6 million. These increases were offset
by a decrease of $0.5 million in telephone expenses reflecting successful
negotiation of a rate reduction. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The increase in general and
administrative expenses of $0.3 million, or 5%, to $5.8 million from $5.5
million during the twelve months ended December 31, 2001 and 2000, respectively,
was primarily due to the rent expense for the addition of the San Diego facility
late in the second quarter of 2000 and an increase in insurance costs, partially
offset by reductions in business related taxes and licenses and in legal
expenses. The increase in depreciation and amortization charges of $0.3 million,
or 14%, to $2.5 million from $2.2 million for the year ended December, 2001 and
2000, respectively, reflected the installation of our Davox call management
system in February 2000 combined with the addition of assets obtained by
acquisition in May 2000. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As a result of increased
portfolio purchases, a return to profitability and general industry trends, we
perceive we are experiencing an increase in the number of collections related
law suits filed against Midland Credit. While we do not have adequate data to
quantify a trend, such an increase in litigation could lead to an increase in
general and administrative expenses in future reporting periods. See Item 3
&#150; Legal Proceedings. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Other income and expense</i></b><br>For the year ended December
31, 2001, total interest expense including fees and amortization of other loan
costs was $10.9 million on average borrowings for the period of $64.2 million,
resulting in an effective all-in interest rate of 17% for the period. The
interest only portion of this total amounted to $4.6 million, for an effective
interest cost of 7%. The balance reflects contingent interest through a sharing of the residual interest
 paid to the lender under our Secured Financing Facility.
For the year ended December 31, 2000, total interest
expense was $7.8&#160;million on average borrowings of $50.3 million, reflecting
an effective all-in interest rate of 16%.<I> </I>The interest only portion of
this total amounted to $4.9 million, for an effective interest cost of 10%.<I>
</I>The increase in total interest expense is due to increased note insurer
premiums provided in the amendments to the Warehouse Facility and Securitization
99-1 financing agreements discussed in Note 4 to the consolidated financial
statements, combined with the accrual for the sharing with the lender of
residual collections under the Secured Financing Facility discussed in
Note&#160;6 to the consolidated financial statements totaling $2.4 million for
the twelve months ended December 31, 2001, and partially offset by lower overall
interest rates. Also during the year ended December 31, 2001, we recognized
other income of $0.2 million that represents interest income and refunds for
business taxes overpaid during 1999 and 2000. This compares to $0.1 million in
other expenses for the year ended December 31, 2000 that was principally made up
of losses on disposal of assets at the Company&#146;s former Hutchinson, Kansas
facility (see Note 3 to the consolidated financial statements), and partially
offset by interest income. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Income taxes</i></b><br>For the year ended December
31, 2001, we recorded an income tax provision of $1.1 million, reflecting an
effective rate of 12%, which represents the deferred tax impact of the decrease
in the unrealized gain. See Notes 1 and 8 to the consolidated financial
statements. For the year ended December 31, 2000, we recorded a benefit of $7.3
million, reflecting an effective rate of 24%. The provision for 2001 and the
lower effective tax benefit for 2000 is a result of our recording a valuation
reserve for our deferred tax assets because of the uncertainty of the recovery
of the tax assets that have been recorded. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Net loss</i></b><br>The net loss for the twelve
months ended December 31, 2001 was $10.9 million compared to a net loss of $23.7
million for the twelve months ended December 31, 2000. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Liquidity and Capital Resources</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Liquidity</i></b><br>We incurred net losses
totaling $23.7 million and $10.9 million for the years ended December 31, 2000
and 2001, respectively and, as a result, we had a stockholders&#146; deficit
totaling $2.4 million at December 31, 2001. However, for the twelve months ended
December 31, 2002, we realized net income of $13.8 million, which included the
restoration of a $6.8 million net deferred tax asset (Note 8 to the consolidated
financial statements), and, after taking into consideration the forgiveness of
certain debt and the issuance of new equity occurring during the first quarter,
stockholders&#146; equity increased to $19.5 million at December 31, 2002. At
year end, we comply with all debt covenants with the exception of the maximum
debt balance covenants relating to our Warehouse Facility and Securitization
99-1 financings (see Note 5 to the consolidated financial statements). We
experienced positive cash flows from operations during 2001 of $8.9 million and
2002 of $24.7 million. We also achieved positive net income during all four
quarters of 2002. </FONT></P>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We believe that there is
sufficient liquidity, given our expectation of continued positive cash flows
from operations, the transactions that occurred in February of 2002 (see Note 2
to the consolidated financial statements), the availability under the Revolving
Line of Credit (see Note 7 to the consolidated financial statements) and Secured
Financing Facility (see Note 7 to the consolidated financial statements), to
fund operations for at least the next 12 months. However, there can be no
assurances that we will successfully sustain profitable operations, continue to
generate positive cash flow from operations, be able to renew our financing arrangements, and satisfy our covenants relating
to debt financings. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Cash Flows and Expenditures</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Year ended December 31, 2002 compared to
December 31, 2001</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We collected $148.8 million
during the year ended December 31, 2002 from all portfolios, an increase of
$65.8 million, or 79%, from the $83.1 million collected during 2001. Collections
on owned portfolios increased by approximately $67.9 million or 97% from
approximately $70.1 million during the year ended December 31, 2001 to
approximately $138.0 million for the year ended December 31, 2002. The source of
the improvement was approximately $79.7 million from the Secured Financing
Facility portfolios. Offsetting this improvement was a $2.4 million reduction in
collections on the 99-1 Securitization, a $1.0 million reduction in collections
on the Warehouse Facility, a $1.5 million reduction from wholly owned
portfolios, and a $6.7 million reduction in the 98-1 Securitization. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The $67.9 million increase
in collections on owned portfolios is offset by approximately $2.5 million in
lower collections related to serviced portfolios. During the year ended December
31, 2001 we collected approximately $13.0 million on serviced portfolios
compared to approximately $10.5 million during the year ended December 31, 2002.
In February of 2003, we returned all exhausted receivables to the owner of these
portfolios; however, we have retained the servicing rights for receivables
placed in the attorney network. As a result of this change, servicing fee income
will decline in 2003. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We currently utilize
various business channels for the collection of charged off credit cards and
other receivables. During 2001 and 2002, we resumed purchasing charged off
unsecured consumer loans and auto loan deficiencies. We purchased $0.4 million
and $1.5 million in unsecured consumer loans in 2001 and 2002, respectively.
Collections related to the unsecured consumer loans amounted to $0.1 million in
2001 and $2.9 million in 2002. We also purchased $0.4 million in auto loan
deficiencies in December of 2002. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table summarizes the collections by collection channel <i>(in thousands)</i>:</font></P>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>2001</u></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>2002</u></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="24%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="34%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Collection Sites</FONT></TD>
     <TD WIDTH="21%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$64,160&nbsp;</FONT></TD>
     <TD WIDTH="21%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;94,997&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Legal collections</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16,325&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">27,620&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sales</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,768&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18,545&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">798&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,646&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total collections for the year</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$83,051&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$148,808&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD></TR>
</TABLE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash flow from operations
improved $15.8 million from $8.9 million for the year ended December 31, 2001 to
$24.7 million for the year ended December 31, 2002. First of all, this reflects
the 79% growth in total gross collections of $65.8 million from 2001 to 2002. At
the same time, we improved our ratio of total cash basis operating expenses and
interest to total gross collections from 60% in 2001 to 44% in 2002. The
combination of these two trends resulted in the cash from operations increasing
from a 11% retention of gross collections in 2001 to a 17% retention in 2002. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our primary investing
activity is the purchase of new receivable portfolios. We purchase receivable
portfolios directly from issuers and from resellers as well as from brokers that
represent various issuers. Purchases affect cash flows in two ways. In periods
in which we make portfolio purchases, we provide ten percent of each
portfolio&#146;s purchase price as our equity contribution. In subsequent
periods, recoveries on the purchased portfolios produce cash flow. We carefully
evaluate portfolios to bid on only those that meet our selective targeted return
profile. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We purchased $62.5 million
in new receivables during the year ended December 31, 2002, up $23.5 million or
60% from the $39.0 million purchased during 2001. In addition, we recovered
$51.2 million in collections against the cost basis of our portfolios and our
investment in the retained interest in 2002; up $34.8 million from the 2001
recoveries of $16.4 million. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Capital expenditures for
fixed assets and capital leases were $0.7 million for the year ended December
31, 2002 compared to $0.4 million for the year ended December 31, 2001. During
the years ended December 31, 2002, and December 31, 2001, all purchases of
capital expenditures were funded with internal cash flow. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash used in financing
activities was $14.2 million for the year ended December 31, 2002. This
reflected $79.8 million in repayment of principal in 2002 under our existing
portfolio financing facilities and was partially offset by borrowings of $62.2
million in 2002 used to fund new portfolio purchases. These compare to
borrowings of $28.9 million in 2001 to fund new portfolios purchases and $14.4
million in repayment of principal in 2001 under our exisiting portfolio
financing facilities. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition, $4.6 million
was received from the proceeds from the sale of the Series A Senior Cumulative
Participating Preferred Stock during 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Year ended December 31, 2001 compared to December 31, 2000</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We collected $83.1 million
during the year ended December 31, 2001 from all portfolios, an increase of
$16.9 million, or 26%, from the $66.1 million collected during 2000. Collections
on owned portfolios increased by approximately $33.1 million or 89% from
approximately $37.0 million during the year ended December 31, 2000 to
approximately $70.1 million for the year ended December 31, 2001. Sources of the
improvement were approximately $13.0 million from the residual asset retained in
the 98-1 Securitization; approximately $20.7 million from the Secured Financing
Facility portfolios; and $1.7 million from wholly owned portfolios. Offsetting
this improvement was a $1.5 million reduction in collections on the 99-1
Securitization and a $0.8 million reduction in collections on the Warehouse
Facility. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The $33.1 million increase
in collections on owned portfolios is offset by approximately $16.1 million in
lower collections related to serviced portfolios. During the year ended December
31, 2000 we collected approximately $29.1 million on serviced portfolios
compared to approximately $13.0 million during the year ended December 31, 2001.
The decrease of $16.1 million was comprised of a $13.1 million decrease in the
98-1 Securitization and a decrease of $3.0 million in collections in our
unrelated third party servicing. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During 2001 we resumed
purchasing charged off unsecured consumer loans, purchasing some $0.4 million in
unsecured consumer loans in 2001. Collections related to the unsecured consumer
loans amounted to $0.1 million in 2001. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table summarizes the collections by collection channel <i>(in thousands)</i>:</font></P>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">

<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>2000</u></FONT></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u> 2001</u></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="24%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="34%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Collection Sites</FONT></TD>
     <TD WIDTH="21%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;61,546&nbsp;</FONT></TD>
     <TD WIDTH="21%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;64,160&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Legal collections</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,655&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16,325&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sales</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,916&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 1,768&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">798&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total collections for the year</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;66,117&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;83,051&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD ALIGN="RIGHT"><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD></TR>
</TABLE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash flow from operations
improved $24.7 million from net cash of $15.8 million used in operations for the
year ended December 31, 2000 to net cash of $8.9 million provided by operations
for the year ended December 31, 2001. First of all, this reflects the 26% growth
in total gross collections of $16.9 million from 2000 to 2001. At the same time,
we shifted our collections strategy to wholly-owned portfolios while
concurrently reducing the amounts collected on behalf of third parties by $16.2
million from 2000 to 2001. Also, we began to improve our ratio of total cash
retained after operating expenses and interest to total gross collections from
69% in 2000 to 60% in 2001. The combination of these three trends resulted in
the cash from operations increasing from spending 24% more than gross
collections in 2000 to a 11% retention of gross collections in 2001. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2001, we began to
increase the volume of our purchases. During most of 2000, we did not have
access to a financing facility to purchase new portfolios. On December 20, 2000,
MRC entered into a $75 million secured financing facility which was utilized to
fund the 2001 purchases. We purchased $39.0 million in new receivables during the
year ended December 31, 2001, up $34.6 million or 786% from the $4.4 million
purchased during 2000. In addition, we recovered $16.4 million in collections
against the cost basis of our portfolios in 2001; up slightly from the $15.9
million of recoveries against the cost basis of our portfolios in 2000. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Capital expenditures for
fixed assets and capital leases were $0.4 million for the year ended December
31, 2001 compared to $2.5 million for the year ended December 31, 2000. The 2000
capital expenditures reflect the installation of our Davox call management
system. During the year ended December 31, 2001, purchases of capital
expenditures were funded with internal cash flow. During the year ended December
30, 2000, capital expenditures were funded primarily from bank borrowings,
capital leases and recoveries on receivable portfolios. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash provided by
financing activities was $13.4 million for the year ended December 31, 2001,
which included the repayment of financings under existing facilities of $15.4
million, offset by borrowings of $28.9 million used to fund new portfolio
purchases. For the twelve months ended December 31, 2000, net cash provided by
financing activities was $4.0 million which is the excess of the proceeds of
$66.4 million over the $59.6 million in debt financings and $1.9 million in
capitalized loan costs related to the financings. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26</font></P>

<HR SIZE=5 COLOR=GRAY NOSHADE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Capital Resources</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Revolving Line of Credit</i></b><br>
We entered into the Sixth
Amended and Restated Promissory Note effective March 22, 2002 to renew our
revolving line of credit. The $15.0 million revolving line of credit carries
interest at the Prime Rate and matures on April 15, 2003. Certain stockholders
of Encore, including Triarc Companies, Inc. (&#147;Triarc&#148;), have
guaranteed this unsecured revolving line of credit. Triarc has a $15.0 million
interest-bearing deposit in a custodial account at the financial institution
providing the revolving credit facility. Such deposit under the guarantees of
the revolving credit borrowings is subject to set off under certain
circumstances if the parties to the guarantees of the revolving credit
borrowings and related agreements fail to perform their obligations there under.

As of March 25, 2003, there is $1.9 million outstanding under the line of credit. The lender has agreed in principle to extend the
maturity date of the line of credit at a reduced principal amount of $5 million through April 15, 2004.  Such reduced line of credit
would continue to be guaranteed by the directors, stockholders and affiliates referred to above. In connection with such guarantee,
an aggregate fee of up to $75,000 per quarter would be paid to all or some of such parties.

 At December 31, 2001
and 2002, we had available unused lines of credit in the amount of $0.3 million
and $11.1 million, respectively. </FONT></P>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Secured Financing Facility</i></b><br>
On December 20, 2000,  MRC  Receivables  Corporation,  a wholly-owned  bankruptcy-remote,  special-purpose  entity,  entered into a $75
million  secured  financing  facility (the &#147;Secured  Financing  Facility&#148;),  which expires on December 31, 2004. The Secured  Financing
Facility generally provides for a 90% advance rate with respect to each qualified receivable  portfolio  purchased.  Notes to be issued
under the facility are  collateralized  by the  charged-off  receivables  that are  purchased  with the  proceeds  from this  financing
arrangement.  Each note has a  maturity  date not to exceed 27 months  after the  borrowing  date.  Once the notes are  repaid  and the
Company has been repaid its investment,  the Company and the lender share remaining cash flows from the receivable  portfolios,  net of
servicing  fees. As of December 31, 2002,  from the  inception of the Secured  Financing  Facility,  the Company  purchased  portfolios
with a face value of $4.2 billion at a price of  approximately  $100.0  million.  The assets  pledged  under this  financing  facility,
together  with their  associated  cash  flows,  would not be  available  to satisfy  claims of general  creditors  of the  Company.  In
conjunction  with the Secured  Financing  Facility,  the Company issued  warrants to purchase up to 621,576  shares of Encore&#146;s  common
stock at $1.00 per share subject to customary anti-dilution adjustments, all of which are exercisable as of December 31, 2002.</FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Securitizations</i></b><br>As a result of the 1998
Securitization transaction, we recorded a retained interest in securitized
receivables. The retained interest is collateralized by the credit card
receivables that were securitized, adjusted for amounts owed to the noteholders.
At the time of the transaction, we recorded the retained interest at an
allocated basis in the amount of $15.8 million based on its relative fair value.
The allocated basis was then adjusted to its fair market value with the
difference resulting in an unrealized gain, net of deferred income taxes,
recorded as other comprehensive income within the accompanying consolidated
statements of stockholders&#146; equity (deficit). The deferred income taxes
associated with the unrealized gain were $0.8 million and $0.2 million as of
December 31, 2001 and 2002, respectively. The unrealized gain is recalculated on
a quarterly basis with the change recorded within the consolidated statements of
stockholders&#146; equity (deficit). The income accrued on the retained interest
was $9.8 million and $5.7 million for 2001 and 2002 respectively. Since repaying
the note in September 2000, we have retained all collections of the underlying
securitized receivables thereby reducing the retained interest balance as
collections thereon are in excess of income accrued. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27</font></P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On March 31, 1999, Encore,
through Midland Funding 98-A Corporation, a bankruptcy remote, special purpose
subsidiary, entered into a $35 million securitized receivables acquisition
facility (the &#147;Warehouse Facility&#148;), structured as a term loan with a
final payment date of December 15, 2004. As of December 31, 2002, the balance
outstanding under this facility amounts to $5.6 million (see Note 7 to the
consolidated financial statements). The facility accrues interest at 1.17% plus
the one-week London interbank offered rate (&#147;LIBOR&#148;) totaling 2.67%
per annum at December 31, 2002. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On January 18, 2000,
Midland Receivables 99-1 Corporation, a bankruptcy remote, special purpose
subsidiary of Encore, issued securitized non-recourse notes in the amount of
$28.9 million, bearing interest at 10% per annum (&#147;Securitization
99-1&#148;). The outstanding balance under this facility is $6.6 million at
December 31, 2002 (see Note&#160;7 to the consolidated financial statements).
The Warehouse facility and Securitization 99-1 are collateralized and
cross-collateralized by certain charged-off receivables with an aggregate
carrying amount of approximately $13.3 and $5.4 million and cash reserve and
collection accounts of $2.2 million and $2.3 million at December&#160;31, 2001
and 2002, respectively, and are insured through a financial guaranty insurance
policy. The insurance policy requires the payment of base premium on a monthly
basis and an additional premium, which is due at the debt maturity. The deferred
premium totaled $1.3 million and $1.8 million at December 31, 2001 and 2002,
respectively, which has been reflected in accounts payable and accrued
liabilities in the accompanying consolidated statements of financial condition.
The Warehouse Facility and Securitization 99-1 have been accounted for as
financing transactions. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Effective September 30,
2002, we entered into amendments to both the Warehouse facility and
Securitization 99-1 agreements. As amended, these agreements provide, among
other things, that the we must (i) maintain on a consolidated basis a minimum
net worth of $5.0 million, (ii) be reappointed as servicer by the note insurer
every six months subsequent to April 30, 2003, and (iii) adhere to a maximum
debt balance covenant which compares the actual note balances to an agreed upon
schedule at the end of each six-month interval. If the actual balances were to
exceed the agreed upon amounts, this would constitute an event of servicer
default and could result in our removal as servicer. As of December 31, 2002, we
were not in compliance with the maximum debt balance covenant, and as required
under the agreement, lowered its servicing fee from 35% to 30%. </FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>28</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Income related to the
Warehouse facility and Securitization 99-1 is being recognized over the
estimated lives of the securitized receivables and both the receivables and the
corresponding debt remain on the our consolidated balance sheet. The assets
pledged, together with their associated cash flows, would not be available to
satisfy claims of our general creditors. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Senior Notes</i></b><br>In January 2000, we
obtained additional financing through the issuance of $10.0 million principal
amount senior notes to an institutional investor. The notes are unsecured
obligations of the Company but are guaranteed by Midland Credit and Triarc. In
connection with the issuance of the notes, we issued warrants to the note
holders and Triarc to acquire up to an aggregate of 528,571 shares of common
stock of the Company at an exercise price of $0.01 per share. In addition, the
notes require semiannual interest payments on January 15 and July 15; however,
during the first two years the notes were outstanding, interest was paid-in-kind
through issuance of additional 12% Senior Notes. On February 22, 2002, the
institutional investor forgave $5.3 million of outstanding debt, consisting of a
$2.8 million reduction in the original note balance, the forgiveness of $1.9
million in Payment-in-Kind Notes, and the forgiveness of $0.6 million in
interest accrued through December 31, 2001, and reduced its warrant position by
200,000 warrants (see Note 2 to the consolidated financial statements). In
conjunction with the debt forgiveness, capitalized loan costs totaling $0.1
million and debt discount totaling $0.5 million were written-off. The net gain
on debt forgiveness totaling $4.7 million was reflected as an adjustment to
stockholders equity. Furthermore, the terms of the Senior Notes and
Payment-in-Kind Notes were revised. The Senior Notes now bear interest at 6% per
annum until July 15, 2003, and 8% per annum from July 16, 2003 to January 15,
2007, when the entire unpaid amount is due. The Senior Notes require semi-annual
interest payments on January 15 and July 15. At our option, interest due through
July 2003 may be repaid with Payment-in-Kind Notes. Such notes would accrue
interest at 6% per annum through July 15, 2003 and 8% per annum thereafter and
would be due July 15, 2005. We elected to make the first two payments in cash. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Preferred Stock</i></b><br>On February 22, 2002,
certain existing stockholders and their affiliates (the &#147;Purchasers&#148;)
made an additional $5.0 million investment in Encore Capital Group, Inc.
Immediately prior to such investment, the Purchasers beneficially owned in
excess of 50% of our common stock on a collective basis. In a related
transaction, one of our principal lenders, ING Capital LLC (&#147;ING&#148;),
forgave $5.3 million of outstanding debt and reduced its warrant position by
200,000 warrants.
The debt forgiveness was recorded net of the debt discount related to the warrants cancelled and deferred loan costs totaling $0.7
million in the aggregate.  The effect of the debt forgiveness was recorded by the Company as a capital contribution since it was
facilitated by various equity holders of the Company through their relationship with the lender resulting from prior investment
banking and financial advisory services rendered to such equity holders by the lender and its affiliates.

 These two transactions increased our net worth by $9.3 million. The preferred class is entitled to dividends and other significant
 rights and privileges (see Note 2 to the consolidated financial
statements). </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Future Contractual Cash Obligations</i></b><br>
The following table summarizes our future contractual cash obligations as of December 31, 2002 <i>(in thousands)</i>:</font></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="85%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2003</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2004  </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006 </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2007  </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thereafter</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total</FONT></TH></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="42%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Capital lease obligations</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    275</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     69</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> &nbsp;&nbsp;&#150;</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> &nbsp;&nbsp;&#150;</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&#150;</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&#150;</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    344</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operating leases</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">786</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">877</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">292</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,125</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment agreements</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">975</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">406</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,381</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Debt - fixed principal payments</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,933</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,250</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,183</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Debt - variable principal payments</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24,308</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,940</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">37,248</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>

<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total contractual cash obligations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 30,277</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 14,292</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  7,640</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    292</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 53,281</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD></TR>

</TABLE>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>This table does not include future interest or future contingent  interest payments.  For additional  information on our debt and lease
commitments see Notes 7 and 9 to the consolidated financial statements.</font></P>








<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Inflation</i></b><br>
We believe that  inflation  has not had a material  impact on our results of  operations  for the three years ended  December 31, 2000,
2001 and 2002 since inflation rates generally remained at relatively low levels.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Critical Accounting Policies</i></b><br>
<i>Investment in receivable portfolios</i> We account for our investment in receivable  portfolios on the "accrual basis" or "cost recovery
method" of accounting in accordance  with the  provisions of the AICPA's  Practice  Bulletin 6,  "<i>Amortization  of Discounts on Certain
Acquired  Loans</i>".  Static pools are  established  with accounts having similar  attributes,  based on the specific seller and timing of
acquisition.  Once a static pool is  established,  the  receivables  are  permanently  assigned to the pool.  The discount  (i.e.,  the
difference between the cost of each static pool and the related aggregate  contractual  receivable balance) is not recorded because the
Company  expects  to collect a  relatively  small  percentage  of each  static  pool's  contractual  receivable  balance.  As a result,
receivable portfolios are recorded at cost at the time of acquisition.</FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We account for each static  pool as a unit for the  economic  life of the pool  (similar  to one loan) for  recognition  of income from
receivable portfolios,  for collections applied to principal of receivable portfolios and for provision for loss or impairment.  Income
from  receivable  portfolios is accrued based on the effective  interest rate  determined for each pool applied to each pool's original
cost basis,  adjusted for accrued income and principal paydowns.  The effective interest rate is the internal rate of return determined
based on the timing and amounts of actual cash received and anticipated future cash flow projections for each pool.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We monitor  impairment  of  receivable  portfolios  based on total  projected  future  cash flows of each  portfolio  compared  to each
portfolio's carrying value. The receivable  portfolios are evaluated for impairment  periodically by management based on current market
and cash flow  assumptions.  Provisions  for  losses are  charged to  earnings  whenever  it is  determined  that the  investment  in a
receivable  portfolio is greater than the estimate of total  probable  future  collections.  Additionally,  if the amount and timing of
future collections are not reasonably  estimable,  we account for those portfolios on the cost recovery method. We recorded  impairment
charges of  approximately  $20.9 million and $1.0 million  against the carrying value of the portfolios in 2000 and 2002,  respectively
(see Note 4 to the consolidated financial statements).  No provision for losses was recorded during the year ended December 31, 2001.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2000, we determined that
twenty-two of our receivable portfolios acquired during 1999 and 2000 were
impaired and recorded related impairment charges of $20.9 million against the
carrying value of those portfolios. Effective July 1, 2001, all portfolios that
were previously impaired and that still had carrying values were returned to
accrual status. Effective October 1, 2001, one of the portfolios returned to
accrual status retroactive to July 1, 2001 and an additional seven portfolios,
with carrying values aggregating $1.5 million at December 31, 2001, were changed
to the cost recovery method as we deemed the pattern of collections to be
unpredictable, making it not feasible to reasonably estimate the amount and
timing of future collections. Effective June 2002, one portfolio and effective
December 2002, another portfolio were changed to the cost recovery method for
the same reasons discussed above. For the year ended December 31, 2002, $2.7
million of income was recognized for those portfolios returned to accrual
status. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2002, we determined that
three of our receivable portfolios acquired during 1999 and 2000 were impaired
and recorded related impairment charges of $1.0 million against the carrying
value of these portfolios. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For those portfolios on
non-accrual status, when collections exceed the remaining net book value of the
related individual portfolios, such excess collections are recorded as income.
During the years ended December 31, 2000, 2001 and 2002, approximately $3.7
million, $5.3 million and $4.3 million, respectively, was recognized as income
pertaining to collections on portfolios on which the related net book value has
been fully recovered. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>31</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During 2002, we initiated
whole portfolio sales. The net gain from this initiative totaled $0.7 million,
which is reflected in Income from Receivable Portfolios. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>Contingent interest.</i> Under
the terms of our Secured Financing Facility, once the notes are repaid for each
purchased portfolio and we have been repaid our investment, the Company and the
lender share remaining cash flows from the receivable portfolios, net of the
servicing fees (&#147;Contingent Interest&#148;). We make estimates with respect
to the timing and amount of collections of future cash flows from these
receivable portfolios. Based on these estimates, we record a portion of our
estimated future profit sharing obligation as Contingent Interest expense.
During the years ended December 31, 2001 and December 31, 2002, we recorded $2.1
million and $13.0 million, respectively, in Contingent Interest expense relating
to the remaining cash flow sharing agreement. Our accrued profit sharing
arrangement related to the Contingent Interest was $2.4 million and $11.2
million as of December 31, 2001 and December 31, 2002, respectively (see Note 7
to the consolidated financial statements). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>Deferred court costs.</i> We
contract with an association of attorneys (the &#147;Network&#148;) that acts as
a clearinghouse to place accounts for collection with attorneys in most of the
50 states. We generally refer charged-off accounts to the Network where we
believe the related debtor has sufficient assets to repay the indebtedness and
has to date been unwilling to pay. In connection with our agreement with the
Network, we advance certain out-of-pocket court costs (&#147;Deferred Court
Costs&#148;). We capitalize these costs in our consolidated financial statements
and provide a reserve for those costs that we believe will be ultimately
uncollectible. Deferred Court Costs, net of the valuation reserves, were $1.2
million as of December 31, 2001 and December 31, 2002. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>Net deferred tax asset.</i> We
use the liability method of accounting for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, &#147;Accounting for Income
Taxes.&#148; Deferred income taxes are recognized based on the differences
between financial statement and income tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Valuation allowances are established, when necessary, to reduce net
deferred tax assets to the amount expected to be realized. The provision for
income taxes represents the tax payable for the period and the change during the
period in deferred tax assets and liabilities. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SFAS No. 109 requires a
valuation allowance against deferred tax assets if, based on available evidence,
it is more likely than not that some or all of the deferred tax assets will not
be realized. As of December 31, 2001, we continued to believe that substantial
uncertainty existed with respect to the future utilization of net operating
losses and other deferred tax assets; therefore, we provided a valuation
allowance relating to such items arising in 2001. For the year ended December
31, 2001, the net deferred tax assets were zero after the application of the
valuation allowance. For the year ended December 31, 2002, we determined that
the utilization of net operating loses and other deferred tax assets were more
likely than not, and therefore removed all but $0.2 million of the valuation
allowance. The change in the valuation allowance resulted in the recognition of
a current net tax benefit in the amount of $6.8 million in the fourth quarter of
2002 (see Note 8 to the consolidated financial statements). </FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>32</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>New Accounting Pronouncements</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In March 2000, the FASB
issued Interpretation No. 44 (&#147;FIN 44&#148;), &#147;<i>Accounting for Certain
Transactions involving Stock Compensation.</i>&#148; The adoption of FIN 44 did not
have a material impact on our consolidated results of operations or financial
position. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2001, the FASB
issued SFAS No. 141, &#147;<i>Business Combinations</i>,&#148; which eliminates the
pooling method of accounting for business combinations initiated after June 30,
2001. In addition, SFAS No. 141 addresses the accounting for intangible assets
and goodwill acquired in a business combination. This portion of SFAS No. 141 is
effective for business combinations completed after June 30, 2001. Our adoption
of SFAS No. 141 did not have a material impact on our consolidated financial
position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2001, the FASB
issued SFAS No. 142, &#147;<i>Goodwill and Intangible Assets</i>,&#148; which revised
the accounting for purchased goodwill and intangible assets. Under SFAS No. 142,
goodwill and intangible assets with indefinite lives will no longer be amortized
and will be tested for impairment annually. SFAS No. 142 is effective for fiscal
years beginning after December 15, 2001, with earlier adoption permitted. Our
adoption of SFAS No. 142 did not have a material impact on our consolidated
financial position or results of operations. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2001, the Financial
Accounting Standards Board (&#147;FASB&#148;) issued Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No. 143, &#147;<i>Accounting for Asset
Retirement Obligations</i>&#148;, which requires that the fair value of a liability
for an asset retirement obligation be recognized in the period in which it is
incurred with the associated asset retirement costs being capitalized as a part
of the carrying amount of the long-lived asset. SFAS No. 143 also includes
disclosure requirements that provide a description of asset retirement
obligations and reconciliation of changes in the components of those
obligations. The statement is effective for fiscal years beginning after June
15, 2002. We do not expect the adoption of SFAS No. 143 to have a material
effect on our consolidated financial position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In August 2001, the FASB
issued SFAS No. 144, &#147;<i>Impairment or Disposal of Long-Lived Assets</i>,&#148;
which addresses accounting and financial reporting for the impairment or
disposal of long-lived assets. This standard was effective for the
Company&#146;s consolidated financial statements beginning January 1, 2002. The
implementation of SFAS No. 144 did not have a material impact on our
consolidated financial position or results of operations. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>33</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In April 2002, the FASB
issued SFAS No. 145, &#147;<i>Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections.</i>&#148; SFAS No.
145 rescinded three previously issued statements and amended SFAS No. 13,
&#147;Accounting for Leases.&#148; The statement provides reporting standards
for debt extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The statement is effective for certain lease transactions occurring after May
15, 2002 and all other provisions of the statement shall be effective for
financial statements issued on or after May 15, 2002. The implementation of SFAS
No. 145 did not have a material impact on our consolidated financial position or
results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2002, the FASB
issued SFAS No. 146, &#147;<i>Accounting for Costs Associated with Exit or Disposal
Activities</i>,&#148; which updates accounting and reporting standards for personnel
and operational restructurings. We will be required to adopt SFAS No. 146 for
exit, disposal or other restructuring activities that are initiated after
December 31, 2002, with early application encouraged. We do not expect the
adoption of SFAS No. 146 to have a material effect on our consolidated financial
position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In November 2002, the FASB
issued Interpretation No. 45 (&#147;FIN 45&#148;), &#147;<i>Guarantor&#146;s
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others</i>.&#148; The adoption of FIN 45 did not have
a material impact on our consolidated finacial position or results of
operations. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In December 2002, the FASB
issued SFAS No. 148, &#147;<i>Accounting for Stock-Based Compensation - Transition
and Disclosure - an Amendment to SFAS No. 123.</i>&#148; SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method on accounting for stock-based employee compensation. We currently do not
intend to adopt SFAS No. 123 and accordingly we do not expect the implementation
of SFAS No. 148 to have a material effect on the our consolidated financial
position or results of operations. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 2003, the FASB
issued Interpretation No. 46 (&#147;FIN 46&#148;), &#147;<i>Consolidation of
Variable Interest Entities</i>.&#148; The adoption of FIN 46 did not have a material
impact on our consolidated financial position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Special Note on Forward-Looking Statements</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This report contains
&#147;forward-looking statements&#148; within the meaning of the federal
securities laws. All statements, other than statements of historical facts,
included or incorporated into this Form 10-K are forward-looking statements. The
words &#147;believe,&#148; &#147;expect,&#148; &#147;anticipate,&#148;
&#147;estimate,&#148; &#147;project,&#148; and similar expressions often
characterize forward looking statements. These statements may include, but are
not limited to, projections of collections, revenues, income or loss, estimates
of capital expenditures, plans for future operations, products or services, and
financing needs or plans, as well as assumptions relating to these matters.
These statements include, among others, statements found under
&#147;Management&#146;s Discussion and Analysis of Financial Condition and
Results of Operations&#148; and &#147;Business.&#148; </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>34</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Actual results could differ
materially from those contained in the forward-looking statements due to a
number of factors, some of which are beyond our control. Factors that could
affect our results and cause them to differ from those contained in the
forward-looking statements include: </FONT></P>

<UL>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the availability of financing;</font>

       <LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>our  ability to  maintain  sufficient  liquidity  to operate  our  business  including  obtaining  new capital to enable us to
         purchase new receivables;</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our ability to purchase receivable portfolios on acceptable terms;</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our continued servicing of the receivables in our securitization transactions and for the unrelated third party;</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our ability to recover sufficient amounts on receivables to fund operations;</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our ability to hire and retain qualified personnel to recover our receivables efficiently;</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes in, or failure to comply with, government regulations; and</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the costs, uncertainties and other effects of legal and administrative proceedings.</font>
</UL>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Forward-looking  statements speak only as of the date the statement was made. They are inherently  subject to risks and  uncertainties,
some of which we cannot  predict or quantify.  Future  events and actual  results  could  differ  materially  from the  forward-looking
statements.  When  considering  each  forward-looking  statement,  you should keep in mind the risk factors and  cautionary  statements
found  throughout  this Form 10-K and  specifically  those found below.  We are not obligated to publicly  update or revise any forward
looking statements, whether as a result of new information, future events, or for any other reason.</font></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition,  it is our policy generally not to make any specific projections as to future earnings,  and we do not endorse projections
regarding future performance that may be made by third parties.</font></P>






<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Risk Factors</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Even with current financing arrangements,
we may be unable to meet our future liquidity requirements</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We cannot make  assurances  that we will be able to meet our future  liquidity  requirements.  We depend on both  internal and external
sources of financing to fund our purchases of receivable  portfolios  and  operations.  Our need for  additional  financing and capital
resources  increases  dramatically  as our  business  grows.  Our failure to continue to obtain  financing  and capital as needed would
limit our ability to acquire additional receivables and to operate our business.  Additional financing,  additional capital or sales of
certain  receivables  for cash may also be needed  if we are  removed  as  servicer  of  receivables  that are part of our  outstanding
securitizations or are owned by third parties.</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>35</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On December  20, 2000,  through a wholly  owned  bankruptcy  remote,  special  purpose  entity,  we entered into a $75 million  Secured
Financing  Facility.  There can be no assurance  that we will have  adequate  liquidity to fund our equity  portion of purchases  under
this facility.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have reached an agreement in principle  with the lender of our  revolving  credit  facility  based on the  commitment  of Triarc and
certain  other  investors  to provide an  unconditional  guaranty  of up to $5.0  million to support  the renewal of our line of credit
through  April 15, 2004.  Nonetheless,  there can be no assurance  that we will be able to extend it in the future or that we can repay
borrowings under the facility if we are unable to renew such line.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may not be able to recover sufficient amounts
on our receivables to fund our operations</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We acquire  and  service  receivables  that the  customers  have  failed to pay and the  sellers  have  written  off.  The  originating
institutions  generally  make numerous  attempts to recover on their  non-performing  receivables,  often using a combination  of their
in-house  collection and legal departments as well as third party collection  agencies.  These receivables are difficult to collect and
we may not cover the costs associated with purchasing the receivables and running our business.</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition,  our ability to recover on our receivables  and produce  sufficient  returns can be negatively  impacted by the quality of
the purchased  receivables.  In the portfolios we purchase from sellers  certain  receivables  fail to comply with certain terms of the
purchase  agreements,  and in the normal course of our business,  we return these receivables to the sellers.  Ineligible accounts that
we have been  unable to return to the  sellers  will yield a lower  return  than  conforming  accounts.  Lower  collections  from those
ineligible  accounts  may  result in the  inability  of Encore to meet  certain  collection  requirements  in the  Securitization  99-1
financing  or the  Warehouse  Facility.
We pursue all remedies available to us when we receive ineligible  accounts,  including the litigation that we commenced with MBNA. The
settlement  from  the  MBNA  litigation,  net of  attorney  fees  and  other  related  costs,  will be paid to the  noteholders  of the
Securitization  99-1  financing  and the  Warehouse  Facility.  . (See Note 16 to the  consolidated  financial  statements.)  See &#147;Risk
Factors &#150; <i>We may not be able to continue to satisfy the restrictive  covenants in our debt  agreements</i>&#148; for a discussion of the effect
of a failure by us to satisfy our covenants in the debt agreements.</font></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may not be able to continue to satisfy the
 restrictive covenants in our debt agreements</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our debt agreements,  including  Securitization  99-1, the Warehouse Facility,  and the Secured Financing Facility,  impose a number of
restrictive covenants,  including financial and liquidity  requirements.  Failure to satisfy any one of these covenants could result in
all or any of the following results:</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<UL>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>acceleration of indebtedness outstanding;</font>
       <LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>cross defaults to and acceleration of indebtedness under other financing agreements;</font>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our removal as servicer  under the facility and  possibly  other  cross-defaulted  facilities  and loss of servicing  fees and
         other consequences;</font>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>liquidation  of the  receivables  in our  securitization  transactions  and loss of our expected  future excess  recoveries on
         receivables in the securitized pools;</font>
<LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2> our inability to continue
to make purchases of receivables needed to operate our business; and/or</FONT>

<LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>our inability to secure alternative financing on favorable terms. </font>
</UL>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any of these  consequences  could have a material  adverse  impact on our  operations,  profitability,  and on our stock  price.  As of
February 28, 2003,  we were in default  under the maximum debt balance  covenants of the  Warehouse  Facility and  Securitization  99-1
financing.  The lender has not waived this default and there can be no assurance  that we will not  experience  additional  defaults in
the future or that we will be able to obtain waivers of this or any other defaults.</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We could lose our servicing rights, which could cause us to reduce our operations and could limit our ability to obtain additional
financing</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>We service  the  receivables  in our 99-1  Securitization  financing,  our  Warehouse  Facility,  and our  Secured  Financing  Facility
arrangement.  Under our  Securitization  99-1 and  Warehouse  Facility,  as  amended,  we must be  reappointed  as  servicer  every six
months.  If we lose our  rights to  service  these or other  receivables,  our cash flow  would be  reduced,  and we could be forced to
curtail our remaining operations.  We could lose the right to service receivables for a variety of reasons including:</font></P>



<UL>
      <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  not being reappointed;</font>
       <LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>defaults in our servicing obligations;</font>

<LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>breaches of representations, warranties or covenants related to the 99-1
Securitization, the Warehouse Facility or the Secured Financing Facility,
including covenants relating to minimum collections, liquidity and minimum net
worth; and </font>

      <LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> bankruptcy or other insolvency.</font>
</UL>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Government regulation may limit our ability to recover and enforce receivables</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Federal and state laws may limit our ability to recover and enforce  receivables  regardless  of any act or omission on our part.  Some
laws and  regulations  applicable to credit card issuers may preclude us from  collecting  on  receivables  we purchase  where the card
issuer failed to comply with applicable laws in generating or servicing the  receivables  that we have acquired.  Laws relating to debt
collections  also directly apply to our business.  Our failure to comply with any laws or regulations  applicable to us could limit our
ability to recover on receivables, which could reduce our collections and earnings.</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>37</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>While receivables  acquisition contracts typically contain provisions  indemnifying us for losses due to the originating  institution's
failure to comply with applicable laws and other events,  we cannot provide  assurances that any indemnities  received from originating
institutions will be adequate to protect us from losses on the receivables or liabilities to customers.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Future losses could impair our ability to raise capital
or borrow money, as well as affect our stock price</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Although we achieved  profitability  in 2002, we recorded a loss of  approximately  $10.9 million for the year ended December 31, 2001.
If we have additional losses, it may become more difficult to raise additional  capital or borrow money as needed,  which can adversely
affect our stock price.  Additional  losses could also result in a default of certain of our  financial  covenants in our financing and
servicing  documents.  Our recent  operating  results also reflect our costs in  connection  with the  expansion  of our  business.  We
cannot give any assurances that our operating results will improve in future periods.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may not be able to identify and acquire enough
receivables to operate profitably and efficiently</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>To operate  profitably over the long term, we must continually  purchase and collect on a sufficient  volume of receivables to generate
cash collections and the related income that exceed our costs.  Because fixed costs,  such as certain  personnel  salaries and lease or
other facilities costs,  constitute a significant portion of our overhead,  if we do not continually replace the receivable  portfolios
we service with  additional  receivable  portfolios or collect  sufficient  amounts on  receivables  owned or serviced by us, we may be
required to reduce the number of employees in our collection operations.  These practices could lead to:</font></P>

<UL>
   <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>low employee morale, higher employee attrition rates, fewer experienced employees and higher
recruiting and training costs; </font>
 <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>disruptions in our operations and loss of
efficiency in collection functions; and </font>
 <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>excess costs associated with unused
space in collection facilities.</font>
</UL>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may not be able to purchase receivables at sufficiently favorable prices or on sufficiently favorable terms
for us to be successful</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our long-term  success depends upon the continued  availability of receivables for purchase that meet our  requirements and our ability
to finance such purchases.  The  availability of receivable  portfolios at favorable  prices and on favorable terms depends on a number
of factors outside of our control,  including the  continuation of the current growth and charge-off  trends in consumer debt and sales
of receivable  portfolios by originating  institutions,  as well as competitive factors affecting  potential  purchasers and sellers of
receivables.  In this regard,  we compete with other  purchasers of defaulted  consumer  receivables  and with  third-party  collection
agencies,  and are  affected by  financial  services  companies  that manage  their own  defaulted  consumer  receivables.  Some of our
competitors  have  greater  capital  resources  than  we  do.  The  possible  entry  of new  competitors,  including  competitors  that
historically  have focused on the  acquisition of different  asset types and the expected  increase in competition  from current market
participants  may  reduce  our  access to  receivables.  In  addition,  aggressive  pricing  by  competitors  could  raise the price of
receivable portfolios above levels that we are willing to pay.</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>38</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may not be able to manage our growth or obtain the
resources necessary to achieve additional growth</i></b></font>
</P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Expanding the operations  places great demands on our  management,  employees and financial  resources.  We cannot give assurances that
we will be able to manage our expanded  operations  effectively or obtain  adequate  resources to cover our increased  expenses.  If we
are able to do so, we intend to continue our growth,  which will place  additional  demands on our  resources.  To continue to grow, we
will need to continue to enhance our operational and financial systems and increase our management, employee and financial resources.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may not be able to hire and retain enough sufficiently
 trained employees to support our operations</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our  industry is very labor  intensive.  We  generally  compete for  qualified  personnel  with  companies  in our  business and in the
collection agency,  tele-services and telemarketing  industries.  We will not be able to service our receivables effectively,  continue
our growth and operate profitability if we cannot hire and retain qualified collection personnel.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may experience high rates of personnel turnover</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>High turnover rate among our employees  increases our recruiting and training costs and may limit the number of experienced  collection
personnel  available to service our  receivables.  A significant  percentage of our employees  joined us within the past year and these
employees are still gaining  experience  with our  collection  process,  procedures and policies.  Our newer  employees tend to be less
productive and generally produce the greatest rate of personnel turnover.</font></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We use estimates in our accounting and we would have to charge our earnings
if actual results were less than estimated</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>In accounting for our  receivable  portfolios,  we recognize  revenue in accordance  with AICPA  Practice  Bulletin No. 6. We determine
revenues  based on actual and  anticipated  cash  collections  projected  by our  proprietary  statistical  models.  The actual  amount
recovered by us on  portfolios  may differ from our  projections.  If the future cash flows were  insufficient  to recover the carrying
value of the portfolio, we would then recognize a charge to earnings in the amount of such shortfall.</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>For our 1998  Securitization,  we have the right to all remaining future collections.  This Securitization was structured as a sale for
accounting  purposes and we account for this right to future collections at fair value, which we determine,  based on the present value
of anticipated  cash  collections.  Actual  recoveries on these  receivables may be less than or slower than expected.  If we determine
that the fair value of our right to future  collections  is less than its value on our books,  we would  recognize a charge to earnings
in the amount of the difference.</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>39</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Our servicing fees may be insufficient to cover our associated servicing costs</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Although we receive a servicing fee to compensate us for our obligations to service  receivables  that are securitized or are under our
lending and  servicing  agreements,  the  servicing  fees from these  receivables  may not be sufficient to reimburse us for all of our
costs associated with servicing the receivables.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Our quarterly operating results may fluctuate
 and cause our stock price to decrease</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Because of the nature of our business,  our quarterly  operating  results may fluctuate in the future,  which may adversely  affect the
market price of our common stock.  The reasons our results may fluctuate include:</font></P>


<UL>
       <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2> the timing and amount of recoveries on our receivables;</font>

<LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our removal as the servicer of the Securitization 99-1, the Warehouse Facility,
or the Secured Financing Facility, or the sale of the receivables that we
service for an unrelated third party </font>

       <LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>any charge to earnings  resulting from a decline in the value of our receivable  portfolios or in the value of our interest in
         securitized receivables; and</font>
       <LI> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>increases in operating expenses associated with the growth of our operations.</font>
</UL>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Our recoveries may decrease during the current weak economic cycle</i></b>
</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The U.S. economy in 2002
and 2003 to date was generally weak and many economic factors were unfavorable.
In addition, we are unable to determine the impact of war on the economy and our business.
We cannot assure you that our collection experience will not worsen in this weak
economic cycle. If our actual collection experience with respect to a receivable
portfolio is significantly lower than we projected when we purchased the
portfolio, our consolidated financial condition and results of operations could
deteriorate. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We could lose a member of our senior management team, which
could negatively affect our operations</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The loss of the services of
one or more of our executive officers or key employees could disrupt our
operations. Although we have employment agreements with two of our senior
executives, there can be no assurances that these agreements will assure the
continued services of these officers. Nor can we assure you that the
non-competition provisions will be enforceable. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Our operations are dependent on technology and phone systems</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our success depends in
large part on sophisticated telecommunications and computer systems. The
temporary or permanent loss of our computer and telecommunications equipment and
software systems, through casualty, operating malfunction or service provider
failure, could disrupt our operations. In the normal course of our business, we
must record and process significant amounts of data quickly and accurately to
properly bid on prospective acquisitions of receivable portfolios and to access,
maintain and expand the databases we use for our collection activities. Any
simultaneous failure of both of our information systems and their backup systems
would interrupt our business operations. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>40</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our business depends
heavily on service provided by various local and long distance telephone
companies. A significant increase in telephone service costs or any significant
interruption in telephone services could reduce our profitability or disrupt our
operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may not be able to successfully anticipate, invest in or adopt
technological advances within our industry</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our business relies on
computer and telecommunications technologies and our ability to integrate new
technologies into our business is essential to our competitive position and our
success. We may not be successful in anticipating, managing, or adopting
technological changes on a timely basis. Computer and telecommunications
technologies are evolving rapidly and are characterized by short product life
cycles. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>While we believe that our
existing information systems are sufficient to meet our current and foreseeable
demands and continued expansion, our future growth may require additional
investment in these systems. We depend on having the capital resources necessary
to invest in new technologies to acquire and service receivables. We cannot
assure you that adequate capital resources will be available to us. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may make acquisitions that prove unsuccessful
or strain or divert our resources</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>From time to time, we
consider acquisitions of other companies in our industry that could complement
our business, including the acquisition of entities in diverse geographic
regions and entities offering greater access to industries and markets that we
do not currently serve. We may not be able to successfully acquire other
businesses or, if we do, we may not be able to successfully integrate these
businesses with our own. Further, acquisitions may place additional constraints
on our resources such as diverting the attention of our management from other
business concerns. Through acquisitions, we may enter markets in which we have
no or limited experience. Moreover, any acquisition may result in a potentially
dilutive issuance of equity securities, incurrence of additional debt and
amortization of expenses related to goodwill and intangible assets, all of which
could reduce our profitability. It is our policy to publicly announce an
acquisition only after an agreement with respect to such acquisition has been
reached. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>41</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>We may be limited in the use of our future net
operating loss carryforwards</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has Federal net
operating loss carryforwards of approximately $14.1 million as of
December&#160;31, 2002. The Company is a loss corporation as defined in Section
382 of the Internal Revenue Code. Therefore, if certain changes in the
Company&#146;s ownership should occur, there could be a significant annual
limitation on the amount of loss carryforwards and future recognized losses that
can be utilized and ultimately some amount of loss carryforwards may not be
realized. This could materially affect our ability to realize some or all of our
net deferred tax asset of $6.8 million that we carry on our consolidated balance
sheet as of December 31, 2002. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Risks of Litigation</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We operate in an extremely
litigious climate and may be named as defendants in litigation. Defending a
lawsuit, regardless of its merit, could be costly and could divert
management&#146;s attention from the operation of our business. In addition, the
costs of insurance continue to increase significantly, and policy deductibles
have increased also. All of these factors may result in a deterioration of our
consolidated financial condition and results of operations. </FONT></P>






<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Your Ownership Interest in the Company Will Be Diluted Upon Issuance
of Shares We Have Reserved for Future Issuance</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On March 25, 2003,
7,411,132 shares of our common stock were outstanding, and 13,556,663 additional
shares of our common stock were reserved for issuance. The issuance of these
additional shares will reduce your percentage ownership in the Company. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following shares were reserved for issuance as of March 25, 2003:</font></P>

<UL>
        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10,000,000  shares  reserved  for  issuance  upon  conversion  of the  Company's  Series  A  Senior  Cumulative  Participating
         Convertible Preferred Stock (plus additional shares pursuant to the antidilution provisions of such Preferred Stock);</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,600,000  shares  reserved for issuance upon the exercise of options  granted or available for grant to employees,  officers,
         directors and consultants under the Company's equity participation plan;</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>335,087  shares  reserved for issuance  upon exercise of warrants  issued to in connection  with the issuance of the Company's
         Senior notes (plus  additional  shares  pursuant to the  antidilution  provisions of the warrants),  which are  exercisable in
         whole or in part through January 12, 2005; and</font>

        <LI><FONT FACE="Times New Roman, Times, Serif" SIZE=2>621,576  shares of common  stock  reserved for  issuance  upon  exercise of a warrant  issued in  connection  with the Secured
         Financing Facility (plus additional shares pursuant to the antidilution  provisions of the warrant),  which are exercisable in
         whole or in part through December 28, 2005.</font>
</UL>


<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The existence of these reserved shares coupled with other factors, such as the relatively small public float, could adversely affect
prevailing market prices for our common stock and our ability to raise capital through an offering of equity securities.</font></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>42</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>The Amount Owed to our  Preferred  Stockholders  Increases as the Value of the Company
 Increases and Such Amount Would Get Paid Before
Common Stockholders in the Event of Liquidation or Sale of the Company</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The  Series A  Preferred  Stock  ranks  senior to the common  stock and any other  junior  securities  with  respect to the  payment of
dividends and  distributions  in certain  circumstances.  In the event of a Liquidation  Event or Sale  Transaction (as those terms are
defined in the  Certificate  of  Designation  for the Series A  Preferred  Stock),  holders of the Series A  Preferred  Stock  would be
entitled to receive a liquidation  preference,  a participation  payment and any accrued but unpaid dividends before any amounts became
available to the common  stockholders.  In the event of a Liquidation  Event or Sale  Transaction,  there can be no assurances that any
amounts  would be  available to the common  stockholders  after  payment of such  amounts.  Additionally,  the Company has the right to
redeem the Series A Preferred Stock under certain conditions upon payment of the liquidation preference and participation payment.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As of December  31, 2002,  the value of the  liquidation  preference  was  $5,000,000
  and the value of the  participation  payment was
$11,000,000.  The  participation  payment is variable and will increase if the value of the Company&#146;s common stock increases.  See Note
2 to the consolidated financial statements.</FONT></P>








<A HREF="#Index">Index</A>
<A NAME="Itemj"></A>

                                  <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Item 7A - Quantitative and Qualitative Disclosure About Market Risk</b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our exposure to market risk relates to interest rate risk  associated  with our variable rate  borrowings.  As of December 31, 2002, we
had total  variable rate  borrowings of $34.5 million,  which  consisted of our Revolving Line of Credit in the amount of $3.9 million,
our Warehouse  Facility in the amount of $5.6 million,  and our Secured  Financing  Facility in the amount of $25.0 million (see Note 7
to the consolidated financial statements).</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Changes in short-term  interest rates also affect our earnings as a result of our borrowings  under bank borrowing  agreements.  If the
market  interest  rates for line of credit and other variable rate  agreements  increase at an average of 10%,  interest  expense would
increase,  and income before income taxes would decrease by approximately $0.2 million,  on an annualized basis, based on the amount of
related  outstanding  borrowings as of December 31, 2002 of $34.5 million.  Conversely,  if market  interest rates decreased an average
of 10%, our interest  expense would  decrease,  thereby  increasing  income before income taxes by  approximately  $0.2 million,  on an
annualized basis, based on borrowings as of December 31, 2002.</font></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>43</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Itemk"></A>

   <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 8 - Consolidated Financial Statements</font></H1>

                                                     <H2 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Encore Capital Group, Inc.</font></H2>

                                                  <H2 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consolidated Financial Statements</font></H2>

                                            <H2 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Years ended December 31, 2000, 2001 and 2002</font></H2>








                                                              <H3 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> Contents</font></H3><br><br><br><br>


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<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD WIDTH="100%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report of Independent Auditors, BDO Seidman, LLP</font></TD>
     <TD WIDTH="3" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;45</font></TD></TR>
<TR  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report of Independent Auditors, Ernst &amp; Young LLP</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;46</font></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audited Financial Statements</font></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>

<TR bgcolor=aqua  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Financial Condition</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;47</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Operations and Comprehensive Income (Loss)</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;48</font></TD></TR>
<TR bgcolor=aqua  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Stockholders' Equity (Deficit)</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;49</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Cash Flows</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;50</font></TD></TR>
<TR bgcolor=aqua  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes to Consolidated Financial Statements</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;52</font></TD></TR>
</TABLE>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>44</font></P>




<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Iteml"></A>


                                                <H2 Align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=3> Report of Independent Auditors</font></H2>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Board of Directors and Stockholders</font><br>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>Encore Capital Group, Inc.</font></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have audited the
accompanying consolidated statements of financial condition of Encore Capital
Group, Inc., previously known as MCM Capital Group, Inc., and its subsidiaries
(the &#147;Company&#148;) as of December 31, 2001 and 2002, and the related
consolidated statements of operations and comprehensive income (loss),
stockholders&#146; equity (deficit) and cash flows for each of the years in the
two year period ended December 31, 2002. These consolidated financial statements
are the responsibility of the Company&#146;s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our
audits. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We conducted our audits in
accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the 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. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Encore Capital Group,
Inc. and its subsidiaries as of December&#160;31, 2001 and 2002, and the
consolidated results of their operations and their cash flows for each of the
years in the two year period ended December&#160;31, 2002, in conformity with
accounting principles generally accepted in the United States of America. </FONT></P>


 <P align=right><FONT  FACE="Times New Roman, Times, Serif" SIZE=2>   /s/ BDO Seidman, LLP</font></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Costa Mesa, California</font><br>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>February 18, 2003, except<br>
for Note 16 as to which the<br>
date is March 25, 2003<br></font></P>




<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>45</font></P>




<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Itemm"></A>

                                                     <H2 Align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=3> Report of Independent Auditors</font></H2>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Board of Directors and Stockholders<br>
Encore Capital Group, Inc.</font></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have audited the
accompanying consolidated statements of operations, stockholders&#146; equity
and cash flows of Encore Captial Group, Inc., (formerly known as MCM Capital
Group, Inc.) and its subsidiaries (the &#147;Company&#148;) for year ended
December 31, 2000. These financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We conducted our audit in
accordance with auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated results of operations and cash flows of
Encore Capital Group, Inc. and its subsidiaries for the year ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States. </FONT></P>


                                               <p align=right> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Ernst &amp; Young LLP</font></p>


<P><font size=2>Kansas City, Missouri<br>
February 2, 2001</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>46</font></P>




<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Itemn"></A>
<A NAME="Item0"></A>


                                                     <H2 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> Encore Capital Group, Inc.</font></H2>

                                            <H3 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Consolidated Statements of Financial Condition</font><br>
                                               <FONT FACE="Times New Roman, Times, Serif" SIZE=2>(In Thousands, Except Par Value Amounts)</font></H3>


<TABLE CELLPADDING="0" CELLSPACING="3" BORDER="0"  WIDTH="85%">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH colspan=2 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 31</font></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>2001</b></font><hr size=2 width=65% COLOR="Black" noshade></TH>
     <TH align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>2002</b></font><hr size=2  width=65% COLOR="Black" noshade></TH></TR>


<TR VALIGN="BOTTOM">
     <TD WIDTH="62%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Assets</b></font></TD>
     <TD WIDTH="13%" ALIGN="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
     <TD WIDTH="10%" ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="62%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash</font></TD>
     <TD WIDTH="13%" ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,412&nbsp;</font></TD>
     <TD WIDTH="10%" ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;&nbsp;&nbsp;752&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Restricted cash <i>(Note 1)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,053&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,105&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment in receivable portfolios, net <i>(Notes 4 and 5)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>47,001&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>64,168&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Retained interest in securitized receivables <i>(Note 5)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17,926&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,256&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Property and equipment, net <i>(Note 6)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5,244&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,541&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Deferred tax assets, net <i>(Note 8)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#150;&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6,813&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Other assets</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,075&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,339&nbsp;</font></TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total assets</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;77,711&nbsp;</font><hr  NOSHADE COLOR="Black" width=65% size=2></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;89,974&nbsp;</font><hr  NOSHADE COLOR="Black" width=65% size=2></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Liabilities and stockholders' equity (deficit)</b></font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Accounts payable and accrued liabilities <i>(Notes 7)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;&nbsp;&nbsp;7,240&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;&nbsp;10,688&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Accrued profit sharing arrangement <i>(Notes 7)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;2,378&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;11,180&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Income tax payable <i>(Notes 8)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&#150;&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;531&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes payable and other borrowings <i>(Note 7)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,215&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>47,689&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Capital lease obligations <i>(Note 9)</i></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,236&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;344&nbsp;</font></TD></TR>

<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total liabilities</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>80,069&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>70,432&nbsp;</font></TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Commitments and contingencies <i>(Notes 9, 11, 14 and 16)</i></font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stockholders' equity (deficit) <i>(Notes 2, 5, 10, 12, and 13):</i></font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Preferred stock, $.01 par value, 5,000 shares authorized, zero</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares and 1,000 shares issued and outstanding at</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 31, 2001 and December 31, 2002 respectively</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Liquidation value of $16,000 at December 31, 2002) </font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font>&#150;</TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Common stock, $.01 par value, 50,000 shares authorized, and</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,161 shares issued and 7,411 shares issued and outstanding at</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2001 and December 31, 2002, respectively
</font></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>72&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>74&nbsp;</font></TD>
</TR>


<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Additional paid-in capital</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22,111&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>31,479&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Accumulated deficit</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(25,737)&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(12,388)&nbsp;</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,196&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;367&nbsp;</font></TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total stockholders' equity (deficit)</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2,358)&nbsp;</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19,542</font></TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD valign=top ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total liabilities and stockholders' equity (deficit)</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;&nbsp;77,711&nbsp;</font><hr  NOSHADE COLOR="Black" width=65% size=2></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$&nbsp;&nbsp;89,974&nbsp;</font><hr  NOSHADE COLOR="Black" width=65% size=2></TD></TR>

</TABLE>

<P align=center><font size=2><i>See accompanying notes to consolidated financial statements.</i></font></P>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>47</font></P>







<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Itemo"></A>



<H2 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> Encore Capital Group, Inc.</font></H2>

                                            <h3 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>  Consolidated Statements of Operations and Comprehensive Income (Loss)</font><br>
                                               <FONT FACE="Times New Roman, Times, Serif" SIZE=2>(In Thousands, Except Per Share Amounts)</font></h3>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="85%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="9"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Years ended December 31,</b></FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2000</b>  </FONT><HR SIZE=1 width=75% COLOR="Black" NOSHADE></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2001</b></FONT><HR SIZE=1 width=75% COLOR="Black" NOSHADE></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <b>2002</b></FONT><HR SIZE=1 width=75% COLOR="Black" NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="45%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Revenues:</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Income from receivable portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  15,434</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  32,581</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  80,961</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Income from retained interest</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,679</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,806</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,707</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Servicing fees and other related income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,447</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,458</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,712</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total revenues</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">36,560</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">47,845</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">90,380</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operating expenses:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Salaries and employee benefits</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">23,423</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">27,428</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">35,137</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Other operating expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,211</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,708</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,934</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Collection legal costs</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">129</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,457</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,028</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;General and administrative expense</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,458</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,750</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,314</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Restructuring charges <i>(Note 3)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,388</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Provision for portfolio losses <i>(Note 4)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20,886</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,049</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Depreciation and amortization <i>(Note 6)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,154</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,481</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,453</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total operating expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">59,649</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">46,824</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">63,915</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Income (loss) before other income (expense)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;and income taxes</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(23,089</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,021</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">26,465</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other income (expense):</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Interest expense <i>(Notes 7 and 9)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,829</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,945</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(18,592</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Other income (expense)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(69</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">213</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>

     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total other expense</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,898</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,737</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(18,379</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Income (loss) before income taxes</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(30,987</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(9,716</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,086</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Provision for (benefit from) income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;taxes <i>(Note 8)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,257</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,149</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,703</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD></TR>

<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net Income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(23,730</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,865</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,789</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other comprehensive income (loss):</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Increase in unrealized gain on non-qualified</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;deferred compensation plan assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">39</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Decrease in unrealized gain on retained</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;interest in securitized receivables, net of</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;tax</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,400</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,725</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(868</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="2" ALIGN="RIGHT"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Comprehensive income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (25,130</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (12,590</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  12,960</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Earnings (loss) per share - Basic <i>(Note 13)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   (3.20</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   (1.52</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    1.82</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Earnings (loss) per share - Diluted <i>(Note 13)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   (3.20</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   (1.52</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    0.84</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shares used for computation (in thousands):</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic <i>(Note 13)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,421</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,161</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,339</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted <i>(Note 13)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,421</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,161</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16,459</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD></TD></TR>
</TABLE>
                                   <P align=center><font size=2><i>See accompanying notes to consolidated financial statements.</i></font></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>48</font></P>



<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Itemp"></A>


<H2 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> Encore Capital Group, Inc.</font></H2>
<h3 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Consolidated Statements of Stockholders' Equity (Deficit)</font><br>
                                               <FONT FACE="Times New Roman, Times, Serif" SIZE=2>(In Thousands)</font></h3>






<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="85%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Retained </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accumulated</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=left COLSPAN="6"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Common Stock</FONT></TH>

     <TH align=left  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Treasury</FONT></TH>
     <TH align=left  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Stock </FONT></TH>
     <TH align=left  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Preferred</FONT></TH>
     <TH align=left  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Stock</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Additional</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Earnings</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH> </TR>

<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"></TH>
     <TH VALIGN="top" COLSPAN="3"><HR  COLOR="Black" SIZE="1"> </TH>
     <TH VALIGN="top" COLSPAN="3"><HR  COLOR="Black" SIZE="1"> </TH>
     <TH VALIGN="top" COLSPAN="3"><HR  COLOR="Black" SIZE="1"> </TH>
     <TH VALIGN="top" COLSPAN="3"><HR  COLOR="Black" SIZE="1"> </TH>
     <TH VALIGN="top" COLSPAN="3"><HR COLOR="Black" SIZE="1"> </TH>
     <TH VALIGN="top" COLSPAN="3"><HR  COLOR="Black" SIZE="1"></TH>
     <TH align=right COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Paid-In </FONT></TH>
     <TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Accumulated</FONT></TH>
     <TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Comprehensive</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>

<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=left COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shares</FONT></TH>
     <TH align=left COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Par</FONT></TH>
     <TH align=left COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shares</FONT></TH>
     <TH align=left COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cost</FONT></TH>
     <TH align=left COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shares </FONT></TH>
     <TH align=left COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cost</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Capital</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deficit)</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Income</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"> </TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"> </TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"> </TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"> </TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"> </TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><i>Balance at December 31, 1999</i></FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,191</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$72</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  19,777</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   8,858</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   4,321</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  33,028</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Net loss</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(23,730</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(23,730</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Other comprehensive loss - unrealized</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;loss <i>(Note 5)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,400</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,400</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Issuance of common stock warrants</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>(Note 10)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,634</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,634</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Treasury Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">430</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(128)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(128</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Issuance of common stock <i>(Note 3)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">400</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">671</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">675</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><i>Balance at December 31, 2000</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,591</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">76</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">430</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(128)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">22,082</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(14,872</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,921</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,079</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Net loss</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,865</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,865</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Other comprehensive loss - unrealized</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;loss <i>(Note 5)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,725</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,725</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Issuance of common stock warrants</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>(Note 10)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">153</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">153</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Treasury stock cancellation</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(430)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(430)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">128</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(124</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><i>Balance at December 31, 2001</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,161</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">72</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">22,111</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(25,737</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,196</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,358</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT>)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Net Income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,789</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,789</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Other comprehensive loss - unrealized</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;loss <i>(Note 5)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(829</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(829</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT>)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Net proceeds from issuance of</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred Stock <i>(Note 2)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,000</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,578</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,588</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Preferred dividends</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(440</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(440</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT>)</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Forgiveness of debt, net <i>(Note 2)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,665</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,665</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Issuance of common stock warrants</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>(Note 10)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">125</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">125</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Exercise of common stock warrants</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>(Note 10)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">250</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><i>Balance at December 31, 2002</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,411</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">74</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&#150;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 1,000</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$10</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  31,479</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (12,388</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     367</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  19,542</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TH></TR>
</TABLE>
                                     <P align=center><font size=2><i>See accompanying notes to consolidated financial statements.</i></font></P>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>49</font></P>



<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Itemq"></A>

<H2 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> Encore Capital Group, Inc.</font></H2>

                                            <h3 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Consolidated Statements of Cash Flows</font><br>
                                               <FONT FACE="Times New Roman, Times, Serif" SIZE=2> (In Thousands)</font></h3>






<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="85%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="9"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Years ended December 31,</b></FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000 </FONT><HR SIZE=1 width=50% NOSHADE></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT><HR SIZE=1 width=50% NOSHADE></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR SIZE=1 width=50% NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="60%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Operating activities</b></FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Gross Collections</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   66,117</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   83,051</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  148,808</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Less:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts collected on behalf of third parties</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(29,083</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(12,963</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,494</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts applied to principal on receivable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(15,918</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(16,398</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(43,423</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts applied to principal of securitization 98-1</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,808</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Servicing fees</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,017</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,398</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,712</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operating Expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Salaries and employee benefits</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(22,649</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(27,315</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(32,909</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,841</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,096</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,228</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Collection legal costs</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(129</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,457</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(11,028</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,380</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,162</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,707</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring charges</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,388</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest payments</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,207</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4,817</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8,392</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income and expense</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">159</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">197</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">211</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in restricted cash</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">471</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(585</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(52</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net cash provided by (used in) operating activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(15,831</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,853</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24,690</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Investing activities</b></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of receivable portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4,433</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(39,030</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(62,525</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Collections applied to principal of receivable portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15,918</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16,398</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">43,423</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Collections applied to principal of securitization 98-1</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,808</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Proceeds from put-backs of receivable portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">706</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,150</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">882</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash acquired in acquisition of assets from West Capital</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Proceeds from the sale of property and equipment</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">984</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">137</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of property and equipment</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(786</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(428</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(749</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net cash provided by (used in) investing activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,399</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(21,773</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(11,158</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Financing activities</b></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Proceeds from notes payable and other borrowings</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">66,361</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">28,936</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">62,183</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Repayment of notes payable and other borrowings</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(59,607</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(14,440</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(79,669</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Capitalized loan costs relating to financing arrangement</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,893</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(55</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(154</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Proceeds from exercise of common stock warrants</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Proceeds from sale of preferred stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,588</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Payment of preferred dividend</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(250</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchase of treasury stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(128</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Repayment of capital lease obligations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(765</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(997</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(892</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net cash provided by (used in) financing activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,968</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,444</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(14,192</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net increase (decrease) in cash</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">536</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">524</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(660</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash, beginning of year</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">352</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">888</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,412</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash, end of year</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      888</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    1,412</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      752</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD></TR>

</TABLE>
                                    <P align=center><font size=2><i>See accompanying notes to consolidated financial statements.</i></font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>50</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>



<H2 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> Encore Capital Group, Inc.</font></H2>

                                            <h3 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=3> Consolidated Statements of Cash Flows (continued)</font></h3>
   <h3 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reconciliation of Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities</font><br>
                                           <FONT FACE="Times New Roman, Times, Serif" SIZE=2> (In Thousands)</font></h3>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="85%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="9"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Years ended December 31</b></FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2000</b></FONT><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2001</b></FONT><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2002</b></FONT><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net income (loss)</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (23,730)</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     (10,865)</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  13,789</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Adjustments to reconcile net income (loss) to net cash</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;provided by (used in) operating activities:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,154</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,481</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,452</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,145</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,457</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">661</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">94</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">146</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">112</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on sales of property and equipment</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">227</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(11)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax expense (benefit)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,839)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,149</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,234)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in income on retained interest</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3,394)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,816</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">414</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in income on receivable portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">450</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of servicing liability</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,430)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Write-off of basis of settled portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">427</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for portfolio losses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20,886</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,049</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Changes in operating assets and liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in service fee receivable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">379</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in restricted cash</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">471</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(585)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in other assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,593)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(783)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note payable issued in lieu of interest payment</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">613</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,308</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Settlement of amount payable under receivable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;purchase contract</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,323)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in accounts payable and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;accrued liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4,535)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,100</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,282</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net cash provided by (used in) operating activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (15,831)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">       8,853</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  24,690</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Supplemental schedules of non-cash investing activities:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment acquired under capital leases</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   1,737</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Supplemental schedules of non-cash financing activities:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock warrants in connection with</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;debt agreements</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   1,634</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">         153</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     125</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recordation of equity in connection with debt forgiveness</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   4,665</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock in connection with the</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of certain assets of West Capital</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value of assets acquired</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   2,419</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value of liabilities assumed</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,744)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock issued</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     675</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR NOSHADE width=65% COLOR="Black" SIZE="2"></TD></TR>

</TABLE>
                                     <P align=center><font size=2><i>See accompanying notes to consolidated financial statements.</i></font></P>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>51</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<A HREF="#Index">Index</A>
<A NAME="Itemr"></A>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>1.  Significant Accounting Policies</b></FONT></P><br>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Ownership and Description of Business</i></b><br>Encore Capital Group, Inc.
(&#147;Encore&#148; or the &#147;Company&#148;), previously known as MCM Capital
Group, Inc., is a financial services company specializing in the purchase,
collection, restructuring, resale and securitization of receivable portfolios
acquired at deep discounts. The Company is a Delaware holding company whose
principal assets are its investments in its wholly-owned subsidiaries, Midland
Credit Management, Inc. (&#147;Midland Credit&#148;), Midland Funding 98-A
Corporation, Midland Receivables 99-1 Corporation, Midland Acquisition
Corporation, and MRC Receivables Corporation (&#147;MRC&#148;) (collectively
referred to herein as the &#147;Company&#148;). Encore also has a wholly-owned
subsidiary, Midland Receivables 98-1 Corporation, which is not consolidated
(Note 5). The receivable portfolios consist primarily of charged-off domestic
consumer credit card receivables purchased from national financial institutions,
major retail credit corporations, and resellers of such portfolios. Acquisitions
of receivable portfolios are financed by operations and by borrowings from third
parties (Note 7). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Liquidity</i></b><br>The Company incurred net
losses totaling $23.7 and $10.9 million for the years ended December 31, 2000
and 2001, respectively. The Company also had a stockholders&#146; deficit
totaling $2.4 million at December 31, 2001. For the twelve months ended December
31, 2002, the Company realized net income of $13.8 million, which included the
restoration of a net deferred tax asset in the amount of $6.8 million (Note 8),
and, after taking into consideration the forgiveness of certain debt and the
issuance of new equity occurring during the first quarter, stockholders&#146;
equity increased to $19.5 million at December 31, 2002. The Company complied
with all debt covenants with the exception of the maximum debt balance covenants
relating to its Warehouse Facility and Securitization 99-1 financings (see Note
5). The Company experienced positive cash flows from operations during 2001 and
2002, and achieved positive net income during all four quarters of 2002. The
Company believes that there is sufficient liquidity, given its expectation of
positive cash flows from operations, the transactions that occurred in February
of 2002 (see Note 2), the availability under the Revolving Line of Credit (see
Note 7) and Secured Financing Facility (see Note 7), to fund operations for at
least the next 12 months. However, there can be no assurances that the Company
will successfully sustain profitable operations, continue to generate positive
cash flow from operations, and satisfy its covenants relating to debt
financings. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Restricted Cash</i></b><br>Restricted cash represents
cash reserve accounts pledged to the Warehouse Securitization and Securitization
99-1, and undistributed collections held on behalf of trustees and principals
(see Notes 5 and&#160;14). </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>52</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Investment in Receivable Portfolios</i></b><br>The Company accounts for
its investment in receivable portfolios on the &#147;accrual basis&#148; or
&#147;cost recovery method&#148; of accounting in accordance with the provisions
of the AICPA&#146;s Practice Bulletin 6, <I>&#147;Amortization of Discounts on
Certain Acquired Loans&#148;</I>. Static pools are established with accounts
having similar attributes, based on the specific seller and timing of
acquisition. Once a static pool is established, the receivables are permanently
assigned to the pool. The discount (i.e., the difference between the cost of
each static pool and the related aggregate contractual receivable balance) is
not recorded because the Company expects to collect a relatively small
percentage of each static pool&#146;s contractual receivable balance. As a
result, receivable portfolios are recorded at cost at the time of acquisition. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company accounts for
each static pool as a unit for the economic life of the pool (similar to one
loan) for recognition of income from receivable portfolios, for collections
applied to principal of receivable portfolios and for provision for loss or
impairment. Income from receivable portfolios is accrued based on the effective
interest rate determined for each pool applied to each pool&#146;s original cost
basis, adjusted for accrued income and principal paydowns. The effective
interest rate is the internal rate of return determined based on the timing and
amounts of actual cash received and anticipated future cash flow projections for
each pool. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company monitors
impairment of receivable portfolios based on total projected future cash flows
of each portfolio compared to each portfolio&#146;s carrying value. The
receivable portfolios are evaluated for impairment periodically by management
based on current market and cash flow assumptions. Provisions for losses are
charged to earnings when it is determined that the investment in a receivable
portfolio is greater than the estimate of total probable future collections.
Additionally, if the amount and timing of future collections are not reasonably
estimable, the Company accounts for those portfolios on the cost recovery
method. The Company recorded impairment charges of approximately $20.9 million
and $1.0 million against the carrying value of the portfolios in 2000 and 2002,
respectively (see Note&#160;4). No provision for losses was recorded during the
year ended December 31, 2001. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Securitization Accounting</i></b><br>
In September 2000, the FASB
issued SFAS No. 140, <I>&#147;Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities</I>,<I>&#148;</I> that
replaces, in its entirety, SFAS No. 125. The accounting treatment prescribed by
this pronouncement was effective for fiscal years ending after December 15, 2000
for disclosure purposes. The adoption of this pronouncement did not have a
significant impact on the Company&#146;s consolidated financial statements. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>53</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Retained Interest in Securitized Receivables</i></b><br>In 2000, the Company&#146;s
investment in retained interest in securitized receivables was treated as a debt
security similar to an available-for-sale security and was carried at fair
value. At the time of securitization, the retained interest was initially
recorded at the basis allocated in accordance with SFAS No. 125. This original
cost basis was adjusted to fair value, which was based on the discounted
anticipated future cash flows on a &#147;cash out&#148; basis, with such
adjustment (net of related deferred income taxes) recorded as a component of
other comprehensive income. The cash out method was used to project cash
collections to be received only after all amounts owed to investors had been
remitted. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Income on the retained
interest was accrued based on the effective interest rate applied to its
original cost basis, adjusted for accrued interest and principal paydowns. The
effective interest rate was the internal rate of return determined based on the
timing and amounts of actual cash received and anticipated future cash flow
projections for the underlying pool of securitized receivables. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 2001, the
Emerging Issues Task Force reached a consensus on EITF 99-20,
&#147;<I>Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets</I>.&#148; EITF 99-20
requires companies to account for all changes in forecasted revenues for
retained beneficial interests prospectively through a change in the effective
interest rate. The Company adopted EITF 99-20 on its effective date,
April&#160;1, 2001. Pursuant to EITF 99-20, the retained interest is carried at
cost, increased by interest accretion based on estimated future cash receipts
and decreased by actual cash collections. The retained interest is estimated to
yield a monthly return based on estimated net cash flows derived from historical
cash flows. The unrealized gain reflected as a component of stockholders&#146;
equity net of tax is recognized in income utilizing the effective interest
method (See Note 5). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company monitors
impairment of the retained interest based on discounted anticipated future cash
flows of the underlying receivables compared to the original cost basis of the
retained interest, adjusted for unpaid accrued interest and principal paydowns.
The discount rate is based on a rate of return, adjusted for specific risk
factors, that would be expected by an unrelated investor in a similar stream of
cash flows. The retained interest is evaluated for impairment by management
quarterly based on current market and cash flow assumptions applied to the
underlying receivables. Provisions for losses are charged to earnings when it is
determined that the retained interest&#146;s original cost basis, adjusted for
unpaid accrued interest and principal paydowns, is greater than the present
value of expected future cash flows. No provision for impairments on the
retained interest were recorded in 2000, 2001 or 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The retained interest is
held by Midland Credit and the related receivable portfolios are held by a
wholly-owned, bankruptcy remote, special purpose subsidiary of the Company,
Midland Receivables 98-1 Corporation. As a result, the value of the retained
interest, and its associated cash flows, would not be available to satisfy
claims of general creditors of the Company. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>54</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Property and Equipment</i></b><br>Property and equipment are
recorded at cost, less accumulated depreciation and amortization. The provision
for depreciation and amortization is computed using the straight-line or an
accelerated method over the estimated useful lives of the assets as follows: </FONT></P>

<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="60%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Leasehold improvements</FONT></TD>
     <TD WIDTH="40%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Lesser of lease term or useful life&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Furniture and fixtures</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5 to 7 years&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Computer hardware and software</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3 to 5 years&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Vehicles</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5 years&nbsp;</FONT></TD></TR>
</TABLE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Maintenance and repairs are
charged to expense in the year incurred. Expenditures for major renewals that
extend the useful lives of fixed assets are capitalized and depreciated over the
useful lives of such assets. </FONT></P>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>Long-Lived
Assets</i></B><br>The Company reviews the
carrying amount of its long-lived assets and identifiable intangible assets for
possible impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future undiscounted net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. </FONT></FONT></P>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>Income
Taxes</i></B><br>The Company uses the
liability method of accounting for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, &#147;Accounting for Income Taxes.&#148;
Deferred income taxes are recognized based on the differences between financial
statement and income tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. The provision for income taxes
represents the tax payable for the period and the change during the period in
deferred tax assets and liabilities (see Note 8).</FONT> </FONT></P>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>Stock-Based
Compensation</i></B><br>The Company has elected to
follow Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock
Issued to Employees, and related interpretations in accounting for its employee
stock options rather than the alternative fair value accounting provided for
under SFAS No. 123, Accounting and Disclosure for Stock-Based Compensation. In
accordance with APB 25, compensation cost relating to stock options granted by
the Company is measured as the excess, if any, of the market price of the
Company&#146;s stock at the date of grant over the exercise price of the stock
options (see Note 12).</FONT> </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>55</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>Fair
Values of Financial Instruments</i></B><br>
The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments:</FONT> </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>Investment in receivable
portfolios:</i> The fair value is estimated based on recent acquisitions of similar
receivable portfolios or discounted expected future cash flows in those cases
where the amounts and timing of projected future cash flows are determined to be
reasonably estimable. The discount rate is based on a rate of return, adjusted
for specific risk factors, that would be expected by an unrelated investor in a
similar stream of cash flows. The fair value of the Company&#146;s investments
in receivable portfolios is estimated to be $49.4 million and $79.6 million
versus a carrying value of $47.0 million and $64.2 million at December 31, 2001
and 2002, respectively. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>Retained interest in
securitized receivables:</i> Fair value is estimated by discounting anticipated
future cash flows using a discount rate based on specific risk factors. The fair
value of the Company&#146;s investment in retained interest in securitized
receivables is estimated to be $19.0 million and $9.4 million versus a carrying
value of $17.9 million and $8.3 million at December 31, 2001 and 2002,
respectively. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>Notes payable and other
borrowings:</i> The carrying amount reported in the consolidated statements of
financial condition approximates fair value for notes payable that are of a
short-term nature. For other borrowings, fair value is estimated by discounting
anticipated future cash flows using market rates of debt instruments with
similar terms and remaining maturities. The carrying amount of other borrowings
approximates fair value. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Use of Estimates</i></b><br>
The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could materially differ from those estimates. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Significant estimates have
been made by management with respect to the timing and amount of collection of
future cash flows from receivable portfolios owned and those underlying the
Company&#146;s retained interest. Significant estimates have also been made with
respect to the Company&#146;s contingent interest obligation (see Note 7) and
the realizability of the Company&#146;s net deferred tax assets (see Note 8).
Actual results are likely to materially differ from these estimates, making it
reasonably possible that a material change in these estimates could occur within
one year. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>56</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>Concentrations
of Risk</i></B><br>Financial instruments,
which potentially expose the Company to concentrations of credit risk, consist
primarily of cash. The Company places its cash with high quality financial
institutions. At times, cash balances may be in excess of the amounts insured by
the Federal Deposit Insurance Corporation. </FONT></FONT></P>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>Earnings
and Loss Per Share</i></b><br>Earnings and Loss per share
are calculated pursuant to Statement of Financial Accounting Standards No. 128,
&#147;Earnings Per Share.&#148; For the years ended December 31, 2000 and 2001,
basic and diluted loss per share include no dilution and are computed by
dividing loss available to common shareholders by the weighted average number of
shares outstanding during the period. Potential common shares excluded from the
computation of loss per share totaled 2,450,000 and 2,441,000 for years ended
December 31, 2000 and 2001. For the year ended December 31, 2002, diluted
earnings per share is computed giving effect to all dilutive potential common
shares that were outstanding during the year. Dilutive potential common shares
consist of incremental shares issuable upon exercise of stock options and
warrants and conversion of outstanding preferred stock. </FONT></FONT></P>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>Reclassifications</i></B><br>


Certain
prior years amounts have been reclassified to conform to the current year
presentation.</FONT></FONT> </P>

<P ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><i>New
Accounting Pronouncements</i></B><br>In March 2000, the FASB
issued Interpretation No. 44 (&#147;FIN 44&#148;), &#147;<i>Accounting for Certain
Transactions involving Stock Compensation</i>.&#148; The adoption of FIN 44 did not
have a material impact on the consolidated results of operations or financial
position of the Company.</FONT> </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2001, the FASB
issued SFAS No. 141, &#147;<i>Business Combinations</i>,&#148; which eliminates the
pooling method of accounting for business combinations initiated after June 30,
2001. In addition, SFAS No. 141 addresses the accounting for intangible assets
and goodwill acquired in a business combination. This portion of SFAS No. 141 is
effective for business combinations completed after June 30, 2001. The
Company&#146;s adoption of SFAS No. 141 did not have a material impact on the
Company&#146;s consolidated financial position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2001, the FASB
issued SFAS No. 142, &#147;<i>Goodwill and Intangible Assets</i>,&#148; which revised
the accounting for purchased goodwill and intangible assets. Under SFAS No. 142,
goodwill and intangible assets with indefinite lives will no longer be amortized
and will be tested for impairment annually. SFAS No. 142 is effective for fiscal
years beginning after December 15, 2001, with earlier adoption permitted. The
Company&#146;s adoption of SFAS No. 142 did not have a material impact on the
Company&#146;s consolidated financial position or results of operations. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>57</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2001, the Financial
Accounting Standards Board (&#147;FASB&#148;) issued Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No. 143, &#147;<i>Accounting for Asset
Retirement Obligations</i>&#148;, which requires that the fair value of a liability
for an asset retirement obligation be recognized in the period in which it is
incurred with the associated asset retirement costs being capitalized as a part
of the carrying amount of the long-lived asset. SFAS No. 143 also includes
disclosure requirements that provide a description of asset retirement
obligations and reconciliation of changes in the components of those
obligations. The statement is effective for fiscal years beginning after June
15, 2002. The Company does not expect the adoption of SFAS No. 143 to have a
material effect on the Company&#146;s consolidated financial position or results
of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In August 2001, the FASB
issued SFAS No. 144, &#147;<i>Impairment or Disposal of Long-Lived Assets</i>,&#148;
which addresses accounting and financial reporting for the impairment or
disposal of long-lived assets. This standard was effective for the
Company&#146;s consolidated financial statements beginning January 1, 2002. The
implementation of SFAS No. 144 did not have a material impact on the
Company&#146;s consolidated financial position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In April 2002, the FASB
issued SFAS No. 145, &#147;<i>Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections.</i>&#148; SFAS No.
145 rescinded three previously issued statements and amended SFAS No. 13,
&#147;Accounting for Leases.&#148; The statement provides reporting standards
for debt extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The statement is effective for certain lease transactions occurring after May
15, 2002 and all other provisions of the statement shall be effective for
financial statements issued on or after May 15, 2002. The implementation of SFAS
No. 145 did not have a material impact on the Company&#146;s consolidated
financial position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In June 2002, the FASB
issued SFAS No. 146, &#147;<i>Accounting for Costs Associated with Exit or Disposal
Activities</i>,&#148; which updates accounting and reporting standards for personnel
and operational restructurings. The Company will be required to adopt SFAS No.
146 for exit, disposal or other restructuring activities that are initiated
after December 31, 2002, with early application encouraged. The Company does not
expect the adoption of SFAS No. 146 to have a material effect on the
Company&#146;s consolidated financial position or results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In November 2002, the FASB
issued Interpretation No. 45 (&#147;FIN 45&#148;), &#147;<i>Guarantor&#146;s
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others.</i>&#148; The adoption of FIN 45 did not have
a material impact on the consolidated finacial statements of the Company. </FONT></P>



<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>In December 2002, the FASB issued SFAS No. 148,
  &#147;<i>Accounting  for  Stock-Based  Compensation - Transition and Disclosure - an Amendment
to SFAS No. 123.</i>&#148;SFAS No. 148 provides  alternative  methods of  transition  for a voluntary  change to the fair value based method on
accounting for stock-based  employee  compensation.  The Company  currently does not intend to adopt SFAS No. 123 and accordingly  does
not expect the  implementation of SFAS No. 148 to have a material effect on the Company's  consolidated  financial  position or results
of operations.</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>58</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 2003, the FASB
issued Interpretation No. 46 (&#147;FIN 46&#148;), &#147;<i>Consolidation of
Variable Interest Entities</i>.&#148; The adoption of FIN 46 did not have a material
impact on the consolidated financial statements of the Company. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>2.&nbsp;&nbsp;
Sale of Preferred Stock and Debt Forgiveness</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On February 22, 2002,
certain existing stockholders and their affiliates (the &#147;Purchasers&#148;)
made an additional $5.0 million investment in Encore Capital Group, Inc.
Immediately prior to such investment, the Purchasers beneficially owned in
excess of 50% of the Company&#146;s common stock on a collective basis. In a
related transaction, one of the Company&#146;s principal lenders, ING Capital
LLC (&#147;ING&#148;), forgave $5.3 million of outstanding debt and reduced its
warrant position by 200,000 warrants.

The debt forgiveness was recorded net of the debt discount related to the warrants cancelled and deferred loan costs totaling $0.7
million in the aggregate.  The effect of the debt forgiveness was recorded by the Company as a capital contribution since it was
facilitated by various equity holders of the Company through their relationship with the lender resulting from prior investment
banking and financial advisory services rendered to such equity holders by the lender and its affiliates.

  These two transactions increased the Company&#146;s
net worth by $9.3 million. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Purchasers received
1,000,000 shares of the Company&#146;s Series A Senior Cumulative Participating
Convertible Preferred Stock (the &#147;Series A Preferred Stock&#148;) at a
price of $5.00 per share for $5.0 million in cash less $0.4 million of costs
associated with the issuance. Each share of Series A Preferred Stock is
convertible at the option of the holder, at any time, into 10 shares of common
stock at a conversion price of $0.50 per share of common stock, subject to
customary anti-dilution adjustments. The Series A Preferred Stock has a
cumulative dividend, payable semi-annually. Until February 15, 2004, dividends
are payable in cash and/or additional Series A Preferred Stock, at the
Company&#146;s option, at the rate of 10.0% per annum. Thereafter, dividends
will be payable only in cash, at a rate of 10.0% per annum. The dividend payable
on August 15, 2002 and February 15, 2003 were paid in cash. The dividend rate increases to 15.0% per
annum in the event of a qualified public offering, a change of control (each as
defined) or the sale of all or substantially all of the assets of the Company.
In the event dividends are not declared or paid, the dividends will accumulate
on a compounded basis. The Series A Preferred Stock has a liquidation preference
equal to the sum of the stated value of the Series A Preferred Stock ($5.0
million in the aggregate) plus all accrued and unpaid dividends thereon and a
participation payment equal to shares of common stock at the conversion price
and/or such other consideration that would be payable to holders of the Series A
Preferred Stock if their shares had been converted into shares of the
Company&#146;s common stock immediately prior to the liquidation event. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>59</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Series A Preferred
Stock ranks senior to the common stock and any other junior securities with
respect to the payment of dividends and liquidating distributions. The Company
is prohibited from issuing any capital stock that ranks senior to the Series A
Preferred Stock without the consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Upon the occurrence of a
qualified public offering, a change in control, or a sale of the Company, the
Company may, by decision of the then independent members of the Board of
Directors, redeem the outstanding Series A Preferred Stock in whole, but not in
part, at an aggregate redemption price equal to the $5.0 million liquidation
preference, plus dividends, as described above, plus the participation payment. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The holders of the Series A
Preferred Stock are entitled to vote on an as converted basis with the holders
of the common stock as a single class and have the right to vote as a class on
certain specified matters. In the event that the Company fails to pay dividends
for either two consecutive semi-annual periods or any four semi-annual periods,
the Purchasers are entitled to designate two directors to serve on the
Company&#146;s Board of Directors for as long as at least 10% of the shares of
the Series A Preferred Stock remain outstanding. The holders of the Series A
Preferred Stock also have been granted registration rights in respect of the
common stock underlying the Series A Preferred Stock. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The investment by the
Purchasers was approved by the Company&#146;s board of directors, following the
recommendation of a special committee consisting of the Company&#146;s
independent director formed specifically for the purpose of evaluating and
considering the transaction. The special committee was advised by an independent
financial advisor and by independent legal counsel. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>3.&nbsp;&nbsp;  Acquisition of Certain Assets of West
 Capital Financial Services Corp. &amp; Restructuring Charges</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On May 22, 2000, Midland
Acquisition Corporation (&#147;MAC&#148;), a Delaware corporation and a
wholly-owned subsidiary of the Company, completed the acquisition of certain
operating assets and the assumption of certain operating liabilities of WCFSC,
Inc., formerly known as West Capital Financial Services Corp. (&#147;West
Capital&#148;), a California corporation, pursuant to an Asset Purchase
Agreement (the &#147;Purchase Agreement&#148;). West Capital was a majority
owned subsidiary of SunAmerica, Inc. The aggregate consideration paid by the
Company to West Capital for such net assets acquired was 375,000 shares of
Encore common stock valued at approximately $0.6 million as of May 22, 2000
based on a closing price of $1.6875 per share. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The assets acquired include
three portfolios of charged-off credit card receivables, all of the fixed assets
of West Capital, and certain agreements and licenses used by West Capital in the
operation of its business. Various assets that were acquired pursuant to the
Purchase Agreement were used as part of West Capital&#146;s business of
collecting charged-off credit card receivables, including computer hardware and
software, telephone equipment, and other related equipment. MAC licensed the
assets to Midland Credit which has continued to use those assets in similar
operations. As part of the transaction, all of the previous employees of West
Capital were offered and accepted employment by Midland Credit. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>60</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In a separate but related
transaction, the Company acquired certain charged-off credit card receivables
from a trust formed by WCFSC Special Purpose Corporation (&#147;WCFSC
SPC&#148;), a California corporation and wholly-owned subsidiary of West
Capital, pursuant to a trust receivables purchase agreement, dated May 22, 2000,
by and among Encore, West Capital, WCFSC SPC, WCFSC Special Purpose Corporation
II, and Norwest Bank Minnesota, National Association, as trustee for WCFSC
Consumer Receivables Recovery Trust 1995-1. The consideration for the
acquisition consisted of 25,000 shares of Encore&#146;s common stock with a
value of approximately $42,000 based on a closing price of $1.6875 per share on
May 22, 2000. In December 2000, the Company repurchased the 400,000 shares from
SunAmerica for $0.1 million. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On the acquisition date,
Midland Credit also became the successor servicer to a pool of charged-off
consumer accounts that were owned by West Capital Receivables Corporation I, a
California corporation and wholly owned, bankruptcy-remote subsidiary of West
Capital. Under the terms of the servicing contract, Midland Credit earns a
servicing fee for collections of these receivables (see Note 14). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In conjunction with the
West Capital transaction, certain former officers of West Capital replaced
certain officers of the Company, which resulted in severance charges of
approximately $0.9 million recorded during 2000. Additionally, the Company
closed its operations center in Hutchinson, Kansas in June 2000. The closure
resulted in additional severance charges of approximately $0.2 million for 93
employees terminated. The Company also recorded a loss of approximately $0.3
million pertaining to the disposition of the Hutchinson facility. The entire
reserve was utilized in the third quarter of 2000. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>4.&nbsp;&nbsp;  Investment in Receivable Portfolios</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2000, the Company
determined that twenty-two of its receivable portfolios acquired during 1999 and
2000 were impaired and recorded related impairment charges of $20.9 million
against the carrying value of those portfolios. Effective July 1, 2001, all
portfolios that were previously impaired and that still had carrying values were
returned to accrual status. Effective October 1, 2001, one of the portfolios
returned to accrual status retroactive to July 1, 2001 and an additional seven
portfolios, with carrying values aggregating $1.5 million at December 31, 2001,
were changed to the cost recovery method as the Company deemed the pattern of
collections to be unpredictable, making it not feasible to reasonably estimate
the amount and timing of future collections. Effective June 2002, one portfolio
and effective December 2002, another portfolio were changed to the cost recovery
method for the same reasons discussed above. For the year ended December 31,
2002, $2.7 million of income was recognized for those portfolios returned to
accrual status. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>61</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2002, the Company
determined that three of its receivable portfolios acquired during 1999 and 2000
were impaired and recorded related impairment charges of $1.0 million against
the carrying value of these portfolios. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For those portfolios on
non-accrual status, when collections exceed the remaining net book value of the
related individual portfolios, such excess collections are recorded as income.
During the years ended December 31, 2000, 2001 and 2002, approximately $3.7
million, $5.3 million and $4.3 million, respectively, was recognized as income
pertaining to collections on portfolios on which the related net book value has
been fully recovered. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During 2002, the Company
initiated whole portfolio sales. The net gain from this initiative totaled $0.7
million, which is reflected in Income from Receivable Portfolios. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table
summarizes the changes in the balance of the investment in receivable portfolios
during the following periods <i>(in thousands)</i>: </FONT></P><br><br><br><br>
<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="44%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance, beginning of year</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  57,473</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  25,969</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   47,001</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Purchase of receivable portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,433</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">39,030</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">62,525</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Receivable portfolios acquired in the</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;West Capital transaction</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Write-off of basis of settled portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(427)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Provision for portfolio losses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(20,886)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,049)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Collections applied to receivable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(28,375)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(45,305)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(120,352)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Revenue accreted on receivable portfolios</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,751</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">27,307</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">76,043</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance, end of year</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  25,969</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  47,001</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   64,168</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=top>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>
</TABLE>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company  currently  utilizes  various  business  channels for the  collection  of charged off credit  cards and other  receivables.
During 2001 and 2002,  the Company  began  purchasing  charged off unsecured  consumer  loans and auto loan  deficiencies.  The Company
purchased  $0.4  million and $1.5  million in  unsecured  consumer  loans in 2001 and 2002,  respectively.  Collections  related to the
unsecured  consumer  loans  amounted to $0.1 million in 2001 and $2.9 million in 2002.  The Company also purchased $0.4 million in auto
loan deficiencies in December of 2002.</font></P>



<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table summarizes the collections by collection channel <i>(in thousands)</i>:</font></P>

<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="15%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="26%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Collection Sites</FONT></TD>
     <TD WIDTH="9%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 61,546</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 64,160</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  94,997</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Legal collections</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,655</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16,325</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">27,620</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sales</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,916</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,768</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18,545</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">798</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,646</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>

<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total collections for the year</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 66,117</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 83,051</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 148,808</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>

<TR VALIGN=top>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>

</TABLE>
<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>62</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>5.&nbsp;&nbsp;  Securitization of Receivable Portfolios</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>1998 Securitization/Sale</i></b><br>
On December 30, 1998,
Midland Receivables 98-1 Corporation, a bankruptcy-remote, special-purpose
subsidiary of Midland Credit, issued non-recourse notes in the principal amount
of $33 million, which had a fixed interest rate of 8.63%. These notes were
repaid in full on September 11, 2000. The 1998 Securitization was accounted for
as a sale under the provisions of SFAS No. 125 &#147;Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities&#148;.
Accordingly, the Company recorded a retained interest and a servicing liability,
and recognized a gain of approximately $9.3 million in 1998. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
securitization, the Company received a servicing fee equal to 20% of the gross
monthly collections of the securitized credit card receivables through September
11, 2000, the date of repayment of the notes. During 2000, the Company recorded
servicing fees of $3.7 million. At the time of the transaction, the benefits of
servicing the securitized receivables were not expected to adequately compensate
the Company for the servicing arrangement; therefore, the Company recorded a
servicing liability of $3.6 million. The Company recorded amortization of $1.4
million related to the servicing liability during 2000. In conjunction with the
repayment of the note payable, the servicing liability was fully amortized in
September 2000. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As a result of the
securitization transaction, the Company recorded a retained interest in
securitized receivables. The retained interest was collateralized by the credit
card receivables that were securitized, adjusted for amounts owed to the note
holders. At the time of the transaction, the Company recorded the retained
interest at an allocated basis in the amount of $15.8 million based on its
relative fair value, as discussed in Note 1. The allocated basis was then
adjusted to its fair market value with the difference resulting in an unrealized
gain, net of deferred income taxes, recorded as other comprehensive income
within the accompanying consolidated statements of stockholders&#146; equity.
The deferred income taxes associated with the unrealized gain were $0.8 million
and $0.2 million as of December 31, 2001 and 2002, respectively. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The retained interest was
originally recorded at fair value, with the difference between fair value and
cost basis recorded as unrealized gain and included in accumulated other
comprehensive income as a component of stockholders&#146; equity. Pursuant to
EITF 99-20, the retained interest is carried at cost, increased by interest
accretion based on estimated future cash receipts and decreased by actual cash
collections. The retained interest is estimated to yield an annual return of
approximately 44% based on estimated net cash flows derived from both historical
and projected collections. The income accrued on the retained interest was $11.7
million, $9.8 million and $5.7 million for the years ended December 31, 2000,
2001 and 2002, respectively. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>63</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Once each quarter, the
Company monitors the retained interest for impairment based on discounted
anticipated future cash flows of the underlying receivables compared to the
current carrying value (original cost basis adjusted for unpaid accrued interest
and principal pay downs) of the retained interest. The discount rate is based on
a rate of return, adjusted for specific risk factors that would be expected by
an unrelated investor in a similar stream of cash flows. Provisions for losses
are charged to earnings when it is determined that the retained interest&#146;s
carrying value is greater than the present value of expected future cash flows.
No provision for losses was recorded during the years ended December 31, 2000,
2001 and 2002. </FONT></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following summarizes the changes
 in the balance of the investment in retained interest for 2002 <i>(in thousands)</i>:</font></P>

<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amortized</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Unrealized</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carrying</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cost</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Gain</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Value</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="top">
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="23%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance at December 31, 2001</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  15,929</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   1,997</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  17,926</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Interest accrued</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,707</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,707</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Payments received</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(13,929)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(13,929)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Decrease in unrealized gain</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,448)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,448)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance at December 31, 2002</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   7,707</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     549</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   8,256</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>

</TABLE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following summarizes the changes in the balance of the investment in retained interest for 2001 <i>(in thousands)</i>:</FONT></P>
<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amortized</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Unrealized</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carrying</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cost</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Gain</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Value</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="top">
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="23%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance at December 31, 2000</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  26,748</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   4,868</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  31,616</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Interest accrued</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,806</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,806</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Refund of Deposit</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Payments received</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(20,675)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(20,675)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Decrease in unrealized gain</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,871)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,871)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance at December 31, 2001</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  15,929</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  1,997</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   17,926</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>

</TABLE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following summarizes the changes in the balance of the investment in retained interest for 2000 <i>(in thousands)</i>:</FONT></P>
<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amortized</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Unrealized</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carrying</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Reserves</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Cost </FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Gain </FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Value</FONT><HR NOSHADE width=60% COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="15%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="23%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance at December 31, 1999</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     660</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  22,694</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   7,201</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  30,555</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Interest accrued</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,679</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,679</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Refund of reserve account</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(660)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(660)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Payments received</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,625)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7,625)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Decrease in unrealized gain</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,333)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,333)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=75% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1" ALIGN="RIGHT"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=75% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1" ALIGN="RIGHT"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=75% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1" ALIGN="RIGHT"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=75% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1" ALIGN="RIGHT"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Balance at December 31, 2000</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   &#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  26,748</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   4,868</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  31,616</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=75% NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1" ALIGN="RIGHT"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR  width=75% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1" ALIGN="RIGHT"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=75% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1" ALIGN="RIGHT"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=75% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1" ALIGN="RIGHT"></TD></TR>

</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>64</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>1999 Warehouse and 1999
Securitization Financing</i></b><br>On March 31, 1999, Encore,
through Midland Funding 98-A Corporation, a bankruptcy remote, special purpose
subsidiary, entered into a $35 million securitized receivables acquisition
facility (the &#147;Warehouse Facility&#148;), structured as a term loan with a
final payment date of December 15, 2004. As of December 31, 2002, the balance
outstanding under this facility amounts to $5.6 million (see Note 7). The
facility accrues interest at 1.17% plus the one-week London interbank offered
rate (&#147;LIBOR&#148;) totaling 2.67% per annum at December 31, 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On January 18, 2000,
Midland Receivables 99-1 Corporation, a bankruptcy remote, special purpose
subsidiary of Encore, issued securitized non-recourse notes in the amount of
$28.9 million, bearing interest at 10% per annum (&#147;Securitization
99-1&#148;). The outstanding balance under this facility is $6.6 million at
December 31, 2002 (see Note 7). The Warehouse facility and Securitization 99-1
are collateralized and cross-collateralized by certain charged-off receivables
with an aggregate carrying amount of approximately $13.3 and $5.4 million and
cash reserve and collection accounts of $2.2 million and $2.3 million at
December 31, 2001 and 2002, respectively, and are insured through a financial
guaranty insurance policy. The insurance policy requires the payment of base
premium on a monthly basis and an additional premium, which is due at the debt
maturity. The deferred premium totaled $1.3 million and $1.8 million at December
31, 2001 and 2002, respectively, which has been reflected in accounts payable
and accrued liabilities in the accompanying consolidated statements of financial
condition. The Warehouse Facility and Securitization 99-1 have been accounted
for as financing transactions. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Effective September 30,
2002, the Company entered into amendments to both the Warehouse facility and
Securitization 99-1 agreements. As amended, these agreements provide, among
other things, that the Company must (i) maintain on a consolidated basis a
minimum net worth of $5.0 million, (ii) be reappointed as servicer by the note
insurer every six months subsequent to April 30, 2003, and (iii) adhere to a
maximum debt balance covenant which compares the actual note balances to an
agreed upon schedule at the end of each six-month interval. If the actual
balances were to exceed the agreed upon amounts, this would constitute an event
of servicer default and could result in the Company&#146;s removal as servicer.
As of December 31, 2002, the Company was not in compliance with the maximum debt
balance covenant, and as required under the agreement, lowered its servicing fee
from 35% to 30%. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Income related to the
Warehouse facility and Securitization 99-1 is being recognized over the
estimated lives of the securitized receivables and both the receivables and the
corresponding debt remain on the Company&#146;s consolidated balance sheet. The
assets pledged, together with their associated cash flows, would not be
available to satisfy claims of the Company&#146;s general creditors. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>65</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>6.  Property and Equipment</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Property and equipment consist of the following at
December 31 <i>(in thousands)</i>:</font>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <b>2001</b></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2002</b></FONT></TH></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="19%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Furniture, fixtures and equipment</FONT></TD>
     <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   1,171</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   1,192</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Computer equipment and software</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,852</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,467</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Telephone equipment</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,652</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,704</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Leasehold improvements</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">279</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">341</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,954</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,704</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Accumulated depreciation and amortization</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,710)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8,163)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   5,244</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   3,541</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

</TABLE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>7.  Notes Payable and Other Borrowings</b></font>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company is obligated under the following borrowings as of December 31 <i>(in thousands)</i>:</font></p>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">

<TR VALIGN="BOTTOM">
     <TH  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TH>
     <TH  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TH><TH  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2001</b></FONT><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TH>
        <TH  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TH>
     <TH  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TH><TH  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2002</b></FONT><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TH>
        <TH  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TH></TR>


<TR VALIGN="BOTTOM">
     <TD WIDTH="46%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Secured financing facility, at Prime Rate plus 2.85%,</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="9%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;7.10% at December 31, 2002, due various dates through</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;March 27, 2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  23,291</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  24,984</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Notes payable, Securitization 99-1, 10%,</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;due December 15, 2004 <i>(Note 5)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,436</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,641</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Revolving line of credit at the Prime Rate, 4.25% at</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2002, due April 15, 2003</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">14,729</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,933</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Warehouse facility, LIBOR plus 1.17%, 2.67% at</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2002, due December 15, 2004 <i>(Note 5)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,211</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,623</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Senior notes, increasing rates, due January 15, 2007 <i>(Note 2)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,250</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Payment-in-kind notes, 12%, due July 1, 2005 <i>(Note 2)</i></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,921</FONT><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>

<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">70,588</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">48,431</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Less: Unamortized debt discount</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,373)</FONT><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(742)</FONT><HR width=80% NOSHADE COLOR="Black" SIZE="1"></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>

<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  69,215</FONT><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  47,689</FONT><HR width=80% NOSHADE COLOR="Black" SIZE="2"></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>


</TABLE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Revolving Line of Credit</i></b><br>The Company entered into
the Sixth Amended and Restated Promissory Note effective March 22, 2002 to renew
the Company&#146;s revolving line of credit. The $15.0 million revolving line of
credit carries interest at the Prime Rate and matures on April 15, 2003. Certain
stockholders of Encore, including Triarc Companies, Inc. (&#147;Triarc&#148;),
have guaranteed this unsecured revolving line of credit. Triarc has a $15.0
million interest-bearing deposit in a custodial account at the financial
institution providing the revolving credit facility. Such deposit under the
guarantees of the revolving credit borrowings is subject to set off under
certain circumstances if the parties to the guarantees of the revolving credit
borrowings and related agreements fail to perform their obligations there under.
  The  lender has agreed in  principle  to extend the  maturity  date of the line of credit at a
reduced  principal  amount of $5 million  through  April 15, 2004.  Such reduced line of credit would  continue to be guaranteed by the
directors,  stockholders  and affiliates  referred to above. In connection with such guarantee,  an  aggregate fee of up to $75,000 per
quarter  would be paid to all or some of such  parties.  At December  31, 2001 and 2002,  the Company  had  available  unused  lines of
credit in the amount of $0.3 million and $11.1 million, respectively.</FONT></P>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>66</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Senior Notes</i></b><br>In January 2000, the
Company obtained additional financing through the issuance of $10.0 million
principal amount senior notes to an institutional investor. The notes are
unsecured obligations of the Company but are guaranteed by Midland Credit and
Triarc. In connection with the issuance of the notes, the Company issued
warrants to the note holders and Triarc to acquire up to an aggregate of 528,571
shares of common stock of the Company at an exercise price of $0.01 per share.
In addition, the notes require semiannual interest payments on January 15 and
July 15; however, during the first two years the notes were outstanding,
interest was paid-in-kind through issuance of additional 12% Senior Notes. On
February 22, 2002, the institutional investor forgave $5.3 million of
outstanding debt, consisting of a $2.8 million reduction in the original note
balance, the forgiveness of $1.9 million in Payment-in-Kind Notes, and the
forgiveness of $0.6 million in interest accrued through December 31, 2001, and
reduced its warrant position by 200,000 warrants (see Note 2). In conjunction
with the debt forgiveness, capitalized loan costs totaling $0.1 million and debt
discount totaling $0.5 million were written-off. The net gain on debt
forgiveness totaling $4.7 million was reflected as an adjustment to stockholders
equity. Furthermore, the terms of the Senior Notes and Payment-in-Kind Notes
were revised. The Senior Notes now bear interest at 6% per annum until July 15,
2003, and 8% per annum from July 16, 2003 to January 15, 2007, when the entire
unpaid amount is due. The Senior Notes require semi-annual interest payments on
January 15 and July 15. At the Company&#146;s option, interest due through July
15, 2003 may be repaid with Payment-in-Kind Notes. Such notes would accrue
interest at 6% per annum through July 15, 2003 and 8% per annum thereafter and
would be due July 1, 2005. The Company elected to make the first two payments in
cash. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Secured Financing Facility</i></b><br>On December 20, 2000, MRC
Receivables Corporation, a wholly-owned bankruptcy-remote, special-purpose
entity, entered into a $75 million secured financing facility (the &#147;Secured
Financing Facility&#148;), which expires on December 31, 2004. The Secured
Financing Facility generally provides for a 90% advance rate with respect to
each qualified receivable portfolio purchased. Interest accrues at the prime
rate plus 2.85% per annum and is payable weekly. Once the outstanding balance
under this facility exceeds $25 million, the floating rate margin reduces by 1%
on the amounts in excess of $25 million. Notes to be issued under the facility
are collateralized by the charged-off receivables that are purchased with the
proceeds from this financing arrangement. Each note has a maturity date not to
exceed 27 months after the borrowing date. Once the notes are repaid and the
Company has been repaid its investment, the Company and the lender share
remaining cash flows from the receivable portfolios, net of servicing fees. As
of December 31, 2002, from the inception of the Secured Financing Facility, the
Company purchased portfolios with a face value of $4.2 billion at a price of
approximately $100.0 million. During the years ended December 31, 2001 and
December 31, 2002, the Company recorded $2.1 million and $13.0 million,
respectively, in contingent interest expense relating to the remaining cash flow
sharing agreement. The Secured Financing Facility is collateralized by certain
charged off receivables with an aggregate carrying amount of $56.8 at December
31, 2002. The assets pledged under this financing facility, together with their
associated cash flows, would not be available to satisfy claims of general
creditors of the Company. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>67</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In conjunction with the
Secured Financing Facility, the Company issued warrants to purchase up to
621,576 shares of Encore&#146;s common stock at $1.00 per share subject to
customary anti-dilution adjustments. Of the warrants issued, 155,394 were
exercisable immediately, and the remaining warrants become exercisable in three
equal tranches triggered at the time the Company has drawn an aggregate of $22.5
million, $45.0 million and $67.5 million against the facility, respectively. The
first tranche was triggered during 2001, the second tranche was triggered in the
first quarter of 2002, and the final tranche was triggered in the third quarter
of 2002, thus warrants representing 310,788, and 621,576 shares of the
Company&#146;s common stock were exercisable under this facility at December 31,
2001 and December 31, 2002, respectively. The warrants that became exercisable
during 2001 were valued at $0.1 million, as were the warrants issued during
2002, and were recorded as deferred loan costs in other assets, and as a
component of stockholders&#146; equity (deficit). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Stand-by Line of Credit</i></b><br>Effective October 31, 2000,
the Company executed an agreement with certain of its affiliates for a $2.0
million stand-by working capital line of credit secured by substantially all of
the Company&#146;s assets and those of its subsidiaries. In connection with this
agreement, the lenders received 250,000 warrants to acquire the Company&#146;s
common stock at $0.01 per share. As of December 31, 2001, when the stand-by line
expired, no indebtedness existed. The fair value of the warrants, $0.1 million,
was accounted for by recording deferred loan costs with an offset to additional
paid-in capital as a component of stockholders&#146; equity. All 250,000
warrants were exercised on April 16, 2002 (Note 10). </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>68</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>8.  Income Taxes</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The provision for income
taxes on income before extraordinary charge consists of the following for the
years ended December 31 <I>(in thousands)</I>: </FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="2" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=center COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2000 </FONT><HR align=center width=30% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH align=center COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001 </FONT><HR align=center width=30% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH align=center COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR align=center width=30% NOSHADE COLOR="Black" SIZE="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="23%" colspan=3 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Current expense (benefit):</FONT></TD>

     <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TD colspan=2 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp; (418)  </FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  &#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  &#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD colspan=2 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">531</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(418)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">531</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD colspan=2 ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Deferred expense</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,422)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">892</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,766)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,417)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">257</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(468)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,839)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,149</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,234)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (7,257)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  1,149</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (5,703)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD></TR>

</TABLE>



<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has Federal,  Arizona state, and California state net operating loss  carryforwards  of approximately  $14.1 million,  $4.9
million and $3.2 million,  respectively,  as of December 31, 2002.  The Company is a loss  corporation as defined in Section 382 of the
Internal  Revenue Code.  Therefore,  if certain changes in the Company's  ownership should occur,  there could be a significant  annual
limitation on the amount of loss  carryforwards  and future  recognized  losses that can be utilized and ultimately some amount of loss
carryforwards  may not be  available.  The  remaining  net  operating  losses for Federal  purposes  generated in 2000 and 2001 of $4.8
million and $9.2 million,  respectively,  expire in 2020 and 2021,  respectively.  The remaining net operating losses for Arizona state
income  tax  purposes  generated  in  2000  and  2001 of $0.2  million  and  $4.7  million,  respectively,  expire  in 2010  and  2011,
respectively.  The remaining net operating losses for California  state income tax purposes  generated in 2000 and 2001 of $0.7 million
and $2.5 million,  respectively,  expire in 2012 and 2013, respectively.  Utilization of such California net operating losses have been
suspended by the State of California until 2004.</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The components of deferred tax assets and liabilities consist of the following as of December 31 <i>(in thousands)</i>:</font></P>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2001 </FONT><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH align=right COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR width=70% NOSHADE COLOR="Black" SIZE="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deferred tax assets:</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="29%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Net operating losses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   9,118</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   5,197</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Accrued expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">200</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">331</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Differences in income recognition related to</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;receivable portfolios and retained interest</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,519</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,080</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,837</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,608</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Less valuation allowance</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,071)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(184)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>


<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,766</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,424</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deferred tax liabilities:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Contingent Interest expense</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,041</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,555</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Unrealized gain on retained interest in</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;securitized receivables</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">782</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">215</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Deferred court costs</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">454</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">457</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Other</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">489</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">384</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,766</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,611</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net deferred tax asset</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> &#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   6,813</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="2"></TD></TR>

</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>SFAS No. 109 requires a valuation  allowance  against deferred tax assets if, based on available  evidence,  it is more likely than not
that some or all of the  deferred  tax assets will not be realized.  As of December  31,  2001,  the Company  continued to believe that
some uncertainty existed with respect to the future utilization of net operating losses and other deferred tax assets;  therefore,  the
Company  provided a  valuation  allowance  relating  to such items  arising in 2001.  For the year ended  December  31,  2001,  the net
deferred  taxes were zero after the  application  of the  valuation  allowance.  For the year ended  December  31,  2002,  the  Company
determined that the  utilization of net operating loses and other deferred tax assets were more likely than not, and therefore  removed
all but $0.2 million of the valuation  allowance.  The change in the valuation  allowance  resulted in the recognition of a current tax
benefit in the amount of $6.2 million in the fourth quarter of 2002.</font></P>



<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The 1998 securitization  transaction qualified as a financing for income tax purposes;  therefore,  the Company recorded a deferred tax
liability  pertaining  to the  unrealized  gain on the  retained  interest in the amount of $3.3  million,  as no gain was recorded for
income tax purposes.  The decrease  during 2001 and 2002 in the deferred tax liability of $1.1 million and $0.6 million,  respectively,
relates to the decrease in the  unrealized  gain on retained  interest in securitized  receivables  which is recorded as a component of
other comprehensive loss in the accompanying consolidated statements of stockholders' equity.</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The differences  between the total income tax expense and the income tax expense computed using the applicable  federal income tax rate
of 35% per annum were as follows for the years ended December 31 <i>(in thousands)</i>:</font></P>

<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000 </FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Computed "expected" federal</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (10,845)</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (3,401)</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  2,830</FONT></TD>
        <TD WIDTH="9%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;income tax expense (benefit)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Increase (decrease) in income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;taxes resulting from:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;State income taxes, net</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,612)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">63</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Gain on debt forgiveness</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,633</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Other adjustments, net</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">68</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">34</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(342)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in valuation</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;allowance</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,132</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,516</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(9,887)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD><TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  (7,257)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  1,149</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (5,703)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>

<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD><TD COLSPAN="1"></TD></TR>
</TABLE>
<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>70</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>9.  Leases</b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company  leases office  facilities  and equipment in Phoenix,  Arizona and in San Diego,  California.  The leases are structured as
operating  leases,  and the Company incurred related rent expense in the amounts of $1.1 million,  $1.3 million and $1.3 million during
2000, 2001 and 2002, respectively.</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Commitments for future minimum rentals as of December 31, 2002
are presented below for the years ending December 31: <i>(in thousands)</i>:</font></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="26%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="19%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   786</FONT></TD>
        <TD WIDTH="28%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2004</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">877</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2005</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2006</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2007</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">390</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thereafter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">292</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 3,125</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD></TR>

</TABLE>




<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company leases certain  property and equipment  through capital  leases.  These long-term  leases are  noncancelable  and expire on
varying dates through  2004. At December 31, 2001 and 2002,  the cost of assets under capital  leases is $3.0 million and $0.9 million,
respectively.  The related accumulated amortization as of December 31, 2001 and 2002, was $1.2 million and $0.5 million,  respectively.
Amortization of assets under capital leases is included in depreciation and amortization expense.</font></P>



<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Future  minimum  lease  payments  under  capital  lease  obligations  consist of the  following  for the years ending
 December 31, <i>(in
thousands)</i>:</font></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="13%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  282</FONT></TD>
        <TD WIDTH="39%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2004&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">70</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">352</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Less amount representing interest</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">at 3.345% per annum</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  344</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD></TR>

</TABLE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>10.  Common Stock Warrants</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
issuance of $10 million of 12% senior notes to an institutional lender in
January 2000 (see Note 7), the Company issued warrants to the lender and to
Triarc to acquire 428,571 and 100,000 shares, respectively, of common stock of
the Company at an exercise price of $0.01 per share. The Company also paid a fee
to Triarc in the amount of $0.2 million as consideration of Triarc&#146;s
guarantee of this indebtedness. The Company engaged an independent valuation
firm to determine the value of the warrants for allocation to the $10.0 million
principal amount. The warrants were valued at $3.05 per share and, thus,
recorded as a component of stockholders&#146; equity (deficit) in the amount of
$1.6 million with the same amount recorded as debt discount relating to the
$10.0 million note payable. The $1.6 million debt discount is being amortized as
interest expense over the five-year exercise period of the warrants, resulting
in a remaining debt discount balance of $0.7 million at December 31, 2002. The
agreements pursuant to which the warrants were issued contain anti-dilution
provisions which, as of December 31, 2002, have resulted in the issuance of
additional warrants to purchase shares of the Company&#146;s common stock to the
lender and Triarc totaling 5,241 and 1,275, respectively, at the $0.01 per
share. The anti-dilution warrants were valued at $3,000 and recorded as a
component of stockholders&#146; equity (deficit) and as debt discount relating
to the $10.0 million note payable. During 2002, the institutional lender forgave
warrants to purchase 200,000 shares of the Company&#146;s common stock (see Note
2 and 7). </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>71</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In conjunction with the
Secured Financing Facility, the Company issued warrants to purchase up to
621,576 shares of Encore&#146;s common stock at $1.00 per share subject to
customary anti-dilution adjustments. Of the warrants issued, 155,394 were
exercisable immediately, and the remaining warrants become exercisable in three
equal tranches triggered at the time the Company has drawn an aggregate of $22.5
million, $45.0 million and $67.5 million against the facility, respectively. The
first tranche was triggered in the third quarter of 2001, the second tranche was
triggered in the first quarter of 2002, and the final tranche was triggered in
the third quarter of 2002. Thus warrants representing 310,788, and 621,576
shares of the Company&#146;s common stock were exercisable under this facility
at December 31, 2001 and December 31, 2002, respectively. The warrants that
became exercisable during 2001 were valued at $0.1 million, as were the warrants
issued during 2002, and were recorded as deferred loan costs in other assets,
and as a component of stockholders&#146; equity (deficit). </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Effective October 31, 2000,
the Company executed an agreement with certain of its affiliates for a $2.0
million stand-by working capital line of credit secured by substantially all of
the Company&#146;s assets and those of its subsidiaries. In connection with this
agreement, the lenders received 250,000 warrants to acquire the Company&#146;s
common stock at $0.01 per share. As of December 31, 2001, when the stand-by line
expired, no indebtedness existed. The fair value of the warrants, $0.1 million,
was accounted for by recording deferred loan costs with an offset to additional
paid-in capital as a component of stockholders&#146; equity. All 250,000
warrants were exercised on April 16, 2002. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>11.  Employee Benefit Plan</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company maintains a
401(k) Salary Deferral Plan (the &#147;Plan&#148;) whereby eligible employees
may voluntarily contribute up to a maximum percentage of compensation, subject
to Internal Revenue Code limitations. Company management may match a percentage
of employee contributions at its discretion. Employer matching contributions and
administrative costs relating to the Plan totaled $0.1 million, $0.2 million and
$0.4 million for 2000, 2001 and 2002, respectively. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Effective March 1, 2002,
the Company adopted a non-qualified deferred compensation plan for its senior
management. This plan permits deferral of a portion of compensation until a
specified period of time. As of December 31, 2002, both the current vested
liability and the plan assets were $0.5 million and are included in the
Company&#146;s balance sheet in accrued liabilities and other assets,
respectively. The use of plan assets is legally restricted to distributions to
participants or creditors in the event of bankruptcy. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>72</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>12.  Stock-Based Compensation</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The 1999 Equity
Participation Plan (&#147;1999 Plan&#148;), as amended, permits the grant of
stock or options to employees, directors and consultants. A total of 2,600,000
shares were approved by the stockholders for issuance under the 1999 Plan.
Options may be granted at prices which exceed 85% of the fair market value on
the date of the grant, and expire over a term not to exceed ten years. Options
generally vest ratably over a three-year period, unless otherwise determined by
the Board of Directors. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During 2000 and 2001, the
Company granted stock options to purchase 985,000 shares of its common stock to
certain employees. These options become exercisable over the next five years in
varying amounts depending on the terms of the individual option agreements and
have a term of 10 years. Since the exercise price of the stock options was equal
to the estimated market value of the underlying common stock at the date of
grant, no compensation expense was recognized. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 2002, the
Company&#146;s board of directors approved issuance of stock options for key
personnel to purchase a total of 161,000 shares of the Company&#146;s common
stock at an exercise price of thirty-five cents per share. The options vest over
three years with the first vesting date in January 2003. As the exercise price
equaled the estimated market value of the underlying common stock as the date of
grant, no compensation expense is recognized. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In July 2002, the
Company&#146;s board of directors approved issuance of a stock option to an
officer to purchase 50,000 shares of the Company&#146;s common stock at an
exercise price of fifty-two cents per share. The option vests over three years
with the first vesting date in June 2003. Also, during 2002, 50,000 stock
options previously issued to an officer expired upon their separatation from the
Company. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In September 2002, the
Company&#146;s board of directors approved issuance of stock options for certain
executive officers of the Company to purchase a total of 624,999 shares of the
Company&#146;s common stock at an exercise price of fifty-one cents per share.
The options vest upon the earlier of (i) an acquisition at a price in excess of
$5.00 per share by any party of 60% or more of the Company&#146;s common and
preferred stock (on an as converted and fully diluted basis) other than by the
Company&#146;s current major institutional investors or any affiliate thereof,
(ii) the completion of one or more secondary public offerings at a price in
excess of $5.00 per share by all Encore shareholders owning more than 10% of the
Company&#146;s common and preferred stock (on an as converted basis and fully
diluted basis) as of October 24, 2002, of more than one half of each of their
then current equity ownership interest (on an as converted and fully diluted
basis) as of the effective date of the registration statement, (iii) five years
from the date of grant, or (iv) such other events determined by the Board of
Directors. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>73</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 2003, the
Company&#146;s board of directors approved issuance of stock options for key
personnel to purchase a total of 278,500 shares of the Company&#146;s common
stock at an exercise price of $1.30 per share. The options vest ratably over
three years commencing with January 2004. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pro forma information
regarding net income (loss) and earnings (loss) per share is required by SFAS
No. 123 and has been determined as if the Company had accounted for these stock
options under the fair-value method of SFAS No. 123. The fair value for options
granted was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions for the years ended
December 31, 2000, 2001 and 2002: </FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
<TH COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2000</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
<TH COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2001</FONT><HR NOSHADE width=65% COLOR="Black" SIZE="1"></TH>
     <TH  COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR NOSHADE width=75% COLOR="Black" SIZE="1"></TH>
<TH COLSPAN="1"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Risk free interest rate</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6%</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="9%" ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.5%</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="9%" ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.7%</FONT></TD>
        <TD WIDTH="17%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividend yield</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Volatility factors of the</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;expected market price of the</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Company's common stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">64%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">140%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">113%</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weighted-average expected life of</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;options</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD colspan=2 ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10 years</FONT></TD>

     <TD colspan=2 ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5 years</FONT></TD>

     <TD colspan=2 ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5 years</FONT></TD>
        </TR>
</TABLE>



<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The  Black-Scholes  option  valuation  model was developed for use in estimating the fair value of traded options which have no vesting
restrictions  and are fully  transferable.  In addition,  option valuation  models require the input of highly  subjective  assumptions
including  the expected  stock price  volatility.  Because the Company's  employee  stock  options have  characteristics  significantly
different from those of traded options,  and because changes in the subjective input  assumptions can materially  affect the fair value
estimate,  in management's  opinion,  the existing models do not necessarily provide a reliable single measure of the fair value of its
employee stock options.</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>For purposes of pro forma  disclosures,  the  estimated  fair value of the options is  amortized  to expense over the options'  vesting
period. The Company's pro forma information follows <i>(in thousands, except per share amounts)</i>:</font></P>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH align=right  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=center  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2000</b></FONT><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH align=center  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2001 </b></FONT><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH align=center  COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2002</b></FONT><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="34%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net Income (loss), as reported</FONT></TD>
     <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  (23,730)</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (10,865)</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    13,789</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Plus: Stock-based employee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;compensation expense included in</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;reported net income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Less: Total stock-based employee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;compensation expense determined</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;under fair value based method</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(392)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(45)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(323)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Pro forma net income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  (24,122)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (10,910)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    13,466</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Earnings (loss) per share:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Basic - as reported</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (3.20)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      (1.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      1.82</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Basic - pro forma</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (3.25)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      (1.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      1.77</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Diluted - as reported</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (3.20)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      (1.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      0.84</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Diluted - pro forma</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (3.25)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      (1.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">      0.82</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR width=65% NOSHADE COLOR="Black" SIZE="2"></TD></TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>74</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A summary of the Company's stock option activity and related information is as follows:</font></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted-</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted-</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Average</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Average </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fair Value</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number of</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Option Price </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercise </FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">of Options</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shares </FONT><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Per Share </FONT><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Price</FONT><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Granted</FONT><HR width=60% NOSHADE COLOR="Black" SIZE="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="44%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;Outstanding at December 31, 1999</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="11%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">273,823</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$3.04-$10.00</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    6.00</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Granted</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,250,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.30</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Expired</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(273,823)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;6.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>

<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
<TD COLSPAN="1"></TD>
<TD align=right COLSPAN="1"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Outstanding at December 31, 2000</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,250,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp; 1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Granted</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">135,000</FONT></TD>
        <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp; 1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.43</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Cancelled</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(350,000)</FONT></TD>
        <TD ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp; 1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>

<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
<TD COLSPAN="1"></TD>
<TD align=right COLSPAN="1"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Outstanding at December 31, 2001</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,035,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp; 1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Granted</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">835,999</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0.35-0.52</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0.48</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.39</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Cancelled</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(50,000)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp; 1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>

<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
<TD COLSPAN="1"></TD>
<TD align=right COLSPAN="1"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Outstanding at December 31, 2002</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,820,999</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.35-$1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0.76 </FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN=BOTTOM>

<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
<TD align=right COLSPAN="1"><HR  NOSHADE COLOR="Black" SIZE="2"></TD>
<TD COLSPAN="1"></TD>
<TD COLSPAN="1"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="1"></TD>
     <TD COLSPAN="1"></TD></TR>

</TABLE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table summarizes outstanding and exercisable options at December 31, 2002:</font></P>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=center COLSPAN="9"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Options Outstanding</FONT><HR width=85% align=left NOSHADE COLOR="Black" SIZE="1"></TH>

     <TH align=center COLSPAN="6"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Options Exercisable</FONT><HR NOSHADE COLOR="Black" SIZE="1"></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted-</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted-</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted-</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Average</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Average</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Average</FONT> </TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercise</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Remaining</FONT> </TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercise</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercise Prices</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Outstanding</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Price</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Life</FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Outstanding</FONT> </TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Price</FONT></TH></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD align=left COLSPAN="3"><HR width=75% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="13%" ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$0.35 - $0.52</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="13%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">835,999</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> $0.48</FONT></TD>
        <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="13%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9.4 years</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">985,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> $1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7.1 years</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">467,500</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> $1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD align=left COLSPAN="3"><HR width=75% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$0.35 - $1.00</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,820,999</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> $0.76</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8.2 years</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">467,500</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> $1.00</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD align=left COLSPAN="3"><HR width=76% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="RIGHT"><HR NOSHADE COLOR="Black" SIZE="2"></TD></TR>
</TABLE>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>13.  Earnings (Loss) Per Share</b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Basic earnings per share are computed by dividing net income (loss)  available to common  stockholders  by the weighted  average number
of common shares  outstanding for the reporting  period.  Diluted  earnings per share are computed similar to basic earnings (loss) per
share while giving effect to all potential dilutive common stock equivalents that were outstanding during the period.</font></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>75</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following is a  reconciliation  from basic earnings (loss) per share to diluted earnings per share for the years ended December 31,
2000, 2001 and 2002 <i>(in thousands, except for earnings per share)</i>:</font></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">

<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT><HR width=65% NOSHADE COLOR="Black" SIZE="1"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="43%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net income (loss)</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  (23,730)</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  (10,865)</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  13,789</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Preferred dividends</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(440)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>

<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net income (loss) available to common stockholders</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  (23,730)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  (10,865)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  13,349</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted average shares outstanding</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    7,421</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    7,161</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,339</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Incremental shares from assumed conversion of</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;warrants, options, and preferred stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,120</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="1"></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Adjusted weighted average shares outstanding</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    7,421</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    7,161</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  16,459</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD></TR>


<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Earnings (loss) per share - Basic</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (3.20)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (1.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    1.82</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD></TR>


<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Earnings (loss) per share - Diluted</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (3.20)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    (1.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     .84</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>

<TR VALIGN=BOTTOM>
     <TD COLSPAN="3"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD>
     <TD COLSPAN="3" ALIGN="center"><HR width=55% NOSHADE COLOR="Black" SIZE="2"></TD></TR>

</TABLE>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2000 and 2001, due to
antidilutive effect arising from the loss from continuing operations all common
stock equivalents were excluded from the computation. In 2002, 985,000 stock
options and 621,576 stock warrants were excluded from the computation of diluted
earning per share because of their anti-dilutive effect. </FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>14.  Commitments and Contingencies</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Litigation</i></b><br>The Fair Debt Collection
Practices Act (&#147;FDCPA&#148;) and comparable state statutes may result in
class action lawsuits, which can be material to the Company&#146;s business due
to the remedies available under these statutes, including punitive damages. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In February 2001, in the
Superior Court of the State of Arizona, County of Maricopa, our subsidiary
Midland Credit Management, Inc. and two of its wholly owned subsidiaries,
Midland Funding 98-A Corporation and Midland Receivables 99-1 Corporation, filed
a lawsuit against MBNA America Bank, NA (&#147;MBNA&#148;). The Company has
alleged, among other things, fraud, fraudulent inducement, breach of contract
and negligent misrepresentation arising out of the acquisition of charged-off
receivables purchased from MBNA between September 1999 and February 2000.
See discussion regarding settlement at Note 16. </FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On May 28, 2002, a
complaint was filed by plaintiff Lana Waldon in the United States District Court
for the Northern District of Texas against the Company&#146;s wholly-owned
subsidiary Midland Credit Management, Inc. and an unaffiliated financial
institution, in which the plaintiff purports to assert a claim for alleged
violation of the Fair Debt Collection Practices Act, the Texas Debt Collection
Act and the Texas Deceptive Trade Practices Act on behalf of a class of Texas
residents allegedly similarly situated. Generally, the complaint alleges that
mailings related to a credit card balance transfer program are deceptive and
misleading. The complaint seeks actual, statutory and treble damages in an
amount to be determined, together with pre-judgment and post-judgment interest,
attorneys&#146; fees, and preliminary and permanent injunctions enjoining
defendants from making offers or distributing materials substantially similar to
the mailings that are the subject of the complaint, plus certain other relief.
The defendants have filed motions to dismiss but no hearing on the motions has
been scheduled. No motion for class certification has yet been filed. It is
expected that the plaintiff will seek to expand the putative class to a
nationwide class with respect to the non-local claims asserted, if the current
complaint survives dismissal. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>76</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There are a number of
additional lawsuits or claims pending or threatened against the Company. In
general, these lawsuits or claims have arisen in the ordinary course of business
and involve claims for actual damages arising from alleged misconduct of the
Company&#146;s employees or alleged improper reporting of credit information by
the Company. Although litigation is inherently uncertain, based on past
experience, the information currently available, and the possible availability
of insurance and/or indemnification from originating institutions in some cases,
management of the Company does not believe that the currently pending and
threatened litigation or claims will have a material adverse effect on the
Company&#146;s consolidated financial position or results of operations.
However, management is not currently in a position to determine whether the
resolution of pending or threatened litigation or claims will ultimately have a
material effect on the Company&#146;s financial position or results of
operations in any future reporting period. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company does not
believe that contingencies for ordinary routine claims, litigation and
administrative proceedings and investigations incidental to its business will
have a material adverse effect on its consolidated financial position or results
of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Sales of Purchased Receivables</i></b><br>
The Company sells certain
purchased receivables, including those which it deems are otherwise
uncollectable as a result of the debtors&#146; bankrupt status and other types
of receivables. The sales agreement provides the purchaser a right to put-back
any purchased receivable that does not meet certain criteria, as defined. The
Company has not provided a reserve for put-backs as of December 31, 2002 in its
consolidated financial statements as management believes, based on historical
experience, that such an obligation is de minimis. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Third Party Service Agreement</i></b><br>
The Company services a pool
of charged-off consumer accounts on behalf of an unrelated third party. The
agreement is cancelable upon written notice. The Company receives a service fee,
as defined, for its collections that totaled $4.3 million, $5.5 million and $3.7
million for the years ended December 31, 2000, 2001 and 2002, respectively. The
service fee recognized during the year ended December 31, 2001 includes a
non-recurring fee totaling $0.8 million which relates to the Company&#146;s
assistance with the sale of a component of the pool it services. In December of
2002, the Company decided to return all exhausted receivables to the owner. As a
result of this decision, the Company anticipates a decreasing stream of service
fee income related to these receivables. </FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>77</font>

<HR SIZE=5 COLOR=GRAY NOSHADE>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Employment Agreements</i></b><br>
In March 2002, the Company
entered into two employment agreements with executive officers. Such agreements
generally provided for one-year terms and base compensation aggregating $0.6
million per annum, plus incentive compensation, as defined. The agreements
provide for severance payments over periods between one year and one and a half
years upon termination without cause, as defined. During the second quarter of
2002, the Company reached agreement on severance matters with a former officer.
In connection therewith, the Company paid $0.5 million for release of all claims
and liability. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>15.  Quarterly Information (Unaudited)
 <i>(in thousand, except per share amounts)</i></b></font></P>



<TABLE CELLPADDING="3" CELLSPACING="0" BORDER="0" WIDTH="80%">

<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="12"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Three Months Ended</FONT><HR  NOSHADE COLOR="Black" SIZE="2"></TH>
    </TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 31</FONT><HR  NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">June 30 </FONT><HR  NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">September 30</FONT><HR  NOSHADE COLOR="Black" SIZE="2"></TH>
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">December 31</FONT><HR  NOSHADE COLOR="Black" SIZE="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="39%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2001</b></FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Revenues</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   $8,677</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $10,441</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $13,569</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $15,158</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total operating expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $10,321</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $11,578</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $11,376</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $13,549</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net loss</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($ 3,743)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($ 3,880)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($ 1,045)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($ 2,197)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Basic loss per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.54)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.15)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.31)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Diluted loss per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.52)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.54)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.15)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">($  0.31)</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>2002</b></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Revenues</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $18,196</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $20,129</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $24,406</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $27,649</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total operating expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $13,813</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $15,369</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $16,502</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $18,231</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     $233</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     $692</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   $2,521</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  $10,343</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Basic earnings per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $0.02</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $0.08</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $0.32</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $1.38</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Diluted earnings per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $0.02</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $0.04</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $0.14</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD><TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">    $0.57</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>78</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>16.      Subsequent Event</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On March 21, 2003,  Midland Credit,  a subsidiary of Encore,  and two of Midland  Credit's wholly owned  subsidiaries,  Midland Funding
98-A Corporation and Midland Receivables 99-1 Corporation, entered into a
settlement  agreement with MBNA in connection  with a lawsuit filed against MBNA in the Superior Court of the State of Arizona,  County
of Maricopa,  in February 2001 (see Note 14).  Pursuant to the terms of the settlement,  MBNA is to pay Midland Credit $11.1 million on
or before April 4, 2003 in full and complete  satisfaction of the Company's claims.  The net proceeds which are currently  estimated to
be approximately $7.9 million,  which is net of litigation  expenses and attorneys fees, will be used to repay holders of the Warehouse
Facility and Securitization 99-1 (see Notes 5 and 7). To date, the Company has not received payment. Upon  receipt of the  settlement,  the Company
 will record a net gain,  which will be  comprised of the net proceeds as reduced by the
remaining carrying value of the related receivable portfolios at that date.</font></P>




<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>79</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>



<A HREF="#Index">Index</A>
<A NAME="Itemx"></A>

                                    <P ALIGN=CENTER>   <FONT FACE="Times New Roman, Times, Serif" SIZE=2> <b>Item 9 - Changes in and Disagreements with Accountants</b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The  Company  filed a Form 8-K in May 2001 to report a change in its  independent  public  accountants.  The  following  sets forth the
information included in the Form 8-K:</font></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE="2">(a) </font></P></TD>
<TD WIDTH=95%><P>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;&nbsp;&nbsp;On May 25, 2001, Ernst &amp; Young LLP resigned as the Company's principal accountant.</font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(b)</font> </P></TD>
<TD WIDTH=97%><P><FONT> <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Ernst &amp; Young LLP reported on the consolidated  financial statements for the fiscal year ended December 31, 2000. The consolidated
     financial  statements did not contain an adverse opinion or a disclaimer of opinion,  nor were the opinions  qualified or modified
     as to uncertainty, audit scope or accounting principles.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (c)</font> </P></TD>
<TD WIDTH=97%><P><FONT> <FONT FACE="Times New Roman, Times, Serif" SIZE="2">For the Company's fiscal year ended December 31, 2000 and subsequent  interim periods  preceding such  resignation,  there were no
     disagreements  with Ernst &amp; Young LLP on any matter of  accounting  principles  or practices,  financial  statement  disclosure or
     auditing scope or procedure.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(d) </font> </P></TD>
<TD WIDTH=97%><P><FONT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> For the Company's  fiscal year ended December 31, 2000 and subsequent  interim  periods  preceding such  resignation,  none of the
     "reportable events" listed in Item 304 (a) (1) (v) (A-D) of Regulation S-K occurred.</font>
</font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(e)</font>  </P></TD>
<TD WIDTH=97%><P><FONT>    <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> The Company  requested and received  from Ernst &amp; Young LLP the letter  required by Item 304 (a) (3) of  Regulation S-K.  Such
     letter was filed as Exhibit 16.1 to the Form 8-K, and stated that Ernst &amp; Young LLP agreed with the statements  described  therein
     made by the Company in the report in response to Item 304 (a) (1) of Regulation S-K.</font></font></P>
</TD>
</TR>
</TABLE>


<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company filed a Form 8-K in August 2001 to report that it had engaged BDO Seidman, LLP as the  Company's
independent accounting firm.  The following sets forth the information in the Form 8-K:</font></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">a) </font> </P></TD>
<TD WIDTH=97%><P><FONT>    <FONT FACE="Times New Roman, Times, Serif" SIZE="2">  The decision to engage BDO Seidman, LLP as the Company's accountant was recommended by the Company's Audit Committee and
     approved by the Company's Board of Directors.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">b)</font> </P></TD>
<TD WIDTH=97%><P><FONT>      <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> The Company had not consulted with BDO Seidman, LLP on any matter during or prior to its fiscal year ended December 31, 2000
     and the subsequent first quarter of 2001.</font></font></P>
</TD>
</TR>
</TABLE>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>80</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<A HREF="#Index">Index</A>
<A NAME="Itemy"></A>
<A NAME="Itemz"></A>

<H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Part III</b></font></H1>

                                       <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Item 10 - Directors and Executive Officers of the Company</b></font></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s Board of
Directors consists of nine members, seven of whom were elected at the annual
meeting of the Company&#146;s stockholders held on October 24, 2002. On January
24, 2003, in accordance with the Company&#146;s Bylaws, the Board of Directors
voted to increase the size of the Board to nine members and appointed Nelson
Peltz and Neville J. Katz to fill the newly-created vacancies on the Board. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ERIC D. KOGAN. Mr. Kogan,
age 39, has served as Chairman of the Board of Directors of the Company since
February 1998. Since April 2002, Mr. Kogan has been a Partner of Clarion Capital
Partners, a private equity firm based in New York. From April 1993 to April
2002, Mr. Kogan was an officer of Triarc Companies, Inc., a holding company and,
through its subsidiaries, the franchiser of the Arby&#146;s restaurant system
(&#147;Triarc&#148;), and certain of its subsidiaries, most recently serving as
Triarc&#146;s Executive Vice President of Corporate Development. Prior thereto,
Mr. Kogan was Vice President Corporate Development of Trian Group, Limited
Partnership (&#147;Trian Group&#148;), a private investment banking and
management services firm, from September 1991 to April 1993. Mr. Kogan received
his undergraduate degree from the Wharton School of the University of
Pennsylvania and an MBA from the University of Chicago. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CARL C. GREGORY, III. Mr.
Gregory, age 58, has served since May 23, 2000 as a director and as President
and Chief Executive Officer of the Company. Prior to joining the Company, Mr.
Gregory was Chairman, President and Chief Executive Officer of West Capital
Financial Services Corp. for the period beginning January 1998. Prior to joining
West Capital, Mr. Gregory was Managing Partner of American Western Partners, a
private investment firm, from January 1996 through January 1997. From 1993
through 1995, Mr. Gregory was Chairman, President and Director of MIP
Properties, Inc., a public real estate investment trust. Mr. Gregory also serves
as a director of Apex Mortgage Capital, Inc. Mr. Gregory received his
undergraduate degree in Accounting from Southern Methodist University and an MBA
from the University of Southern California. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PETER W. MAY. Mr. May, age
60, has served as a director of the Company since February 1998. Mr. May has
served since April 1993 as a director and as President and Chief Operating
Officer of Triarc. Since April 1993, he has also been a director or manager and
officer of certain of Triarc&#146;s subsidiaries. Mr. May is also a general
partner of DWG Acquisition Group, L.P., whose principal business is ownership of
securities of Triarc. From its formation in January 1989 to April 1993, Mr. May
was President and Chief Operating Officer of Trian Group. He was President and
Chief Operating Officer of Triangle Industries, Inc., a manufacturer of
packaging products, copper electrical wire and cable and steel conduit and
currency and coin handling products, from 1983 until December 1988. Mr. May
holds BA and MBA degrees from the University of Chicago and is a Certified
Public Accountant. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>81</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ROBERT M. WHYTE. Mr. Whyte,
age 58, has served as a director of the Company since February 1998. Mr. Whyte
has served since 1986 as an investment banker with Audant Investments Pty.
Limited (&#147;Audant&#148;), most recently in the capacity of Executive
Chairman. Since 1997, Mr. Whyte has been a director of Publishing and
Broadcasting Limited, and also serves on the Board of Directors of various other
companies. From 1992 to 1997, Mr. Whyte held non-executive directorships of
Advance Bank Australia Limited and The Ten Group Limited. Mr. Whyte holds a
bachelor&#146;s degree from the University of Sydney. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RICHARD A. MANDELL. Mr.
Mandell, age 60, has served as a director of the Company since June 2001. He
currently is a private investor and financial consultant. Mr. Mandell was a Vice
President - Private Investments of Clariden Asset Management (NY) Inc., a
subsidiary of Clariden Bank, a private Swiss bank, from January 1996 until
February 1998. From 1982 until June 1995, Mr. Mandell served as a Managing
Director of Prudential Securities Incorporated, an investment banking firm. He
also serves as a director of Sbarro, Inc and Woodworkers Warehouse, Inc. Mr.
Mandell holds a BSE degree from the Wharton School of the University of
Pennsylvania and is a Certified Public Accountant. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RAYMOND FLEMING. Mr.
Fleming, age 47, has served as a director of the Company since June 2001. Mr.
Fleming is the Treasurer of Consolidated Press Holdings Limited, a position he
has held since joining that company in August 1999. From May 1997 to August
1999, Mr. Fleming was a banker with BT Australia Ltd., an investment banking
firm. Prior to that, Mr. Fleming had worked within the Australian banking
industry since 1982. Mr. Fleming holds a Bachelor of Economics degree from the
University of Sydney and is a Fellow of the Australian Institute of Chartered
Accountants. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ALEXANDER LEMOND. Mr.
Lemond, age 28, has served as Vice President, Corporate Development of Triarc
since November 2000. Mr. Lemond was an Associate, Corporate Development of
Triarc from December 1997 to November 2000. Prior to that, he was an analyst in
the mergers and acquisitions group at Salomon Smith Barney from July 1996 to
December 1997. Mr. Lemond holds a BSE degree from the Wharton School of the
University of Pennsylvania. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NEVILLE J. KATZ. Mr. Katz,
age 42, has served as a director of the Company since January 2003. Mr. Katz is
the Chief Financial Officer of Audant Investments Pty. Limited, a position he has held since joining that
company in July 2000. From August 1994 to July 2000, Mr. Katz was employed by
James Hardie Industries Limited, a building products manufacturer, in various financial and commercial roles, most
recently as General Manager Corporate Development. Mr. Katz holds a Bachelor of
Commerce degree from the University of Capetown and a Bachelor of Accounting
Science, Honours, from the University of South Africa. He is a member of the
Australian Institute of Chartered Accountants. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NELSON PELTZ. Mr. Peltz,
age 60, has served as a director of the Company since January 2003 and
previously served as a director of the Company from February 1998 until October
2001. Mr. Peltz has been a director and the Chairman and Chief Executive Officer
of Triarc since April 1993. Since then, he has also be a director or manager and
officer of certain of Triarc&#146;s subsidiaries. He is also a general partner
of DWG Acquisition Group, L.P. From its formation in January 1989 to April 1993,
Mr. Peltz was Chairman and Chief Executive Officer of Trian Group. From 1983 to
December 1988, he was Chairman and Chief Executive Officer and a director of
Triangle Industries, Inc. Mr. Peltz attended the Wharton School of the
University of Pennsylvania. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>82</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

                                                        <P ALIGN=CENTER> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> EXECUTIVE OFFICERS</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition to Carl C.
Gregory, III, who is serving as the President and Chief Executive Officer of the
Company and whose biography is set forth above, the following is a list of the
Company&#146;s other executive officers: </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BARRY R. BARKLEY. Mr.
Barkley, age 59, joined the Company in May 2000 and serves as Executive Vice
President and Chief Financial Officer. From March 1998 until joining the
Company, Mr. Barkley was the Chief Financial Officer of West Capital Financial
Services Corp. In October 1995, Mr. Barkley joined Great Western Financial
Corporation as the Corporate Controller reporting to the Vice Chairman. From
August 1990 to September 1995, Mr. Barkley was with Banc One Corporation, first
as Chief Financial Officer and member of the Board of Directors of Bank One,
Texas, N.A. and from January 1994, serving as Executive Director, Corporate
ReEngineering. Mr. Barkley, a CPA, received a bachelor&#146;s degree from Purdue
University in 1966 and received his MBA from Indiana University in 1970. </FONT></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>J. BRANDON  BLACK.  Mr.  Black,  age 35,  joined the Company in May 2000 and serves as Executive  Vice  President  and Chief  Operating
Officer.  From March 1998 until joining the Company,  Mr. Black was the Senior Vice President of Operations for West Capital  Financial
Services Corp.  Prior to joining West Capital,  Mr. Black worked for First Data  Resources  during the period of September 1997 through
April 1998 and for Capital One Financial  Corporation  from June 1989 until August 1997.  Mr. Black  received a bachelor's  degree from
William and Mary in 1989 and an MBA from the University of Richmond in 1996.</font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>JOHN TREIMAN. Mr. Treiman,
age 41, joined the Company in May 2000 and serves as Senior Vice President and
Chief Information Officer. From August 1998 until joining the Company, Mr.
Treiman was a Vice President and the Chief Information Officer for West Capital
Financial Services Corp. From January 1996 through July 1998 Mr.&#160;Treiman
served as Vice President and Chief Information Officer for Frederick&#146;s of
Hollywood. Additionally, Mr. Treiman served as Vice President and Chief
Information Officer for The Welk Group and spent several years in consulting
with KPMG Peat Marwick. Mr. Treiman received a bachelor&#146;s degree from UCLA
in 1983 and received his MBA from the University of Southern California in 1986. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>83</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ROBIN R. PRUITT. Ms.
Pruitt, age 45, joined the Company in September 2001 and serves as Senior Vice
President, General Counsel and Secretary. From June 2000 until joining the
Company, Ms. Pruitt was Vice President and General Counsel of Mitchell
International, Inc., a developer of claims estimating systems for insurance
industries. Ms. Pruitt served as a Vice President of the Company during May and
June 2000, and prior to that was Vice President and General Counsel of West
Capital Financial Services Corp. from November 1998 to May 2000. From May 1995
to January 1998, Ms. Pruitt served as General Counsel of ComStream Corporation,
a designer and manufacturer of satellite communications equipment. Ms. Pruitt
received a bachelor&#146;s degree in Finance and Economics from the University
of South Carolina in 1978 and a JD degree from Boston University School of Law
in 1983. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GEORGE R. BROOKER. Mr.
Brooker, age 38, joined the Company in June 2002 and serves as Vice President
and Controller. From December 1999 until joining the Company, Mr. Brooker was a
consultant with Visionary Solutions, LLP, a management consulting firm
specializing in early stage companies. From January 1997 to November 1999, he
served as Vice President of Finance for Ziro Holdings Corporation, a
manufacturer and distributor of home furnishings. From August 1995 to November
1996, Mr. Brooker was a financial management associate at Textron, Inc. a
Fortune 500 multi-industry company. Additionally, Mr. Brooker spent several
years as a CPA with Coopers &amp; Lybrand. Mr. Brooker received a
bachelor&#146;s degree from San Diego State University in 1987 and an MBA from
Duke University in 1995. </FONT></P>

<A HREF="#Index">Index</A>
<A NAME="Itemaa"></A>

                                   <P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <b>Item 11 - Executive Compensation</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Non-employee directors who
are not affiliated with significant stockholders currently receive a $15,000
annual retainer fee and a $1,000 per meeting fee for attendance at Board or
committee meetings. Directors who are employees of the Company or who are
affiliated with significant stockholders receive no annual retainer fee and no
per meeting fee. All directors are, however, reimbursed for their out-of-pocket
expenses incurred in attending Board or committee meetings. The Company has also
entered into indemnification agreements with each of its directors under which
it has agreed to indemnify them to the fullest extent authorized by law against
certain expenses and losses arising out of certain claims related to the fact
that such person is or was a director of the Company or served the Company in
certain other capacities. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets
forth, for the fiscal years ended December 31, 2002, 2001 and 2000,
respectively, the compensation awarded to or paid by the Company and its
subsidiaries to the Company&#146;s Chief Executive Officer and its four other
most highly compensated executive officers at December 31, 2002 (the &#147;Named
Executive Officers&#148;). Each of the Named Executive Officers became an
officer of the Company in May 2000 other than Ms. Pruitt, who became an officer
of the Company in September 2001. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>84</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=3 ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Long-Term Compensation</u></FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=3 ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <u>Annual Compensation</u></FONT></TH>

     <TH colspan=2 ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Awards</u> </FONT></TH>

     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Payouts</u></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>

     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Restricted </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Underlying </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">All Other</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH align=left ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name and  </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
          <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other Annual</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Stock</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Options/ </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">LTIP</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Compensation</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH align=left><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Principal Position </FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Year </FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Salary </FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Bonus</FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Compensation</FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Award(s)</FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> SARs </FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Payouts</FONT><HR color="black" SIZE=1 NOSHADE></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT><HR color="black" SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="24%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carl C. Gregory, III</FONT></TD>
     <TD WIDTH="7%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$350,000&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$525,000&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="7%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,333&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$28,192&nbsp;&nbsp;(3)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Director, President</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">350,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">350,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,886&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;and Chief Executive</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">204,167&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">250,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">300,000&nbsp;&nbsp;(2)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,650&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Officer</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">J. Brandon Black</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$225,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$337,500&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,333&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$21,218&nbsp;&nbsp;(4)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Executive Vice</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">204,487&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">225,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,532&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;President and Chief</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">116,667&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">150,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">200,000&nbsp;&nbsp;(2)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,933&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Operating Officer</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Barry R. Barkley</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$250,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$337,500&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,333&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$30,335&nbsp;&nbsp;(5)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Executive Vice</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">217,949&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">225,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,569&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;President and Chief</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">116,667&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">75,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">200,000&nbsp;(2)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,057&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Financial Officer</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robin R. Pruitt</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$185,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;92,500&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$10,674&nbsp;&nbsp;(6)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Senior Vice</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;53,365&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;21,583&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">75,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;President, General</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;16,935&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Counsel and Secretary  &nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN=BOTTOM>
     <TD></TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER"></TD></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John R. Treiman</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$176,538&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;87,500&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$11,320&nbsp;&nbsp;(7)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Senior Vice</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">172,276&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;51,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,513&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;President and Chief</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;97,805&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;41,250&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">75,000&nbsp;(2)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,716&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Information Officer</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE>

<HR align=left width=20% color="black" SIZE=1 NOSHADE><br>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</FONT></TD>
     <TD WIDTH="95%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Includes 401(k) plan matching contributions and term life insurance premiums paid by the Company.</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Granted on January 25, 2001.</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Includes non-qualified plan matching contributions of $25,000 paid by the Company.</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Includes non-qualified plan matching contributions of $11,250 and flexible variable universal life</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">insurance premiums of $6,934 paid by the Company.</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Includes non-qualified plan matching contributions of $27,625 paid by the Company.</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Includes non-qualified plan matching contributions of $1,838 and flexible variable universal</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">life insurance premiums of $6,819 paid by the Company.</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Includes non-qualified plan matching contributions of $8,349 paid by the Company.</FONT></TD></TR>
</TABLE>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Option Grants in Last Fiscal Year</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets
forth information concerning grants of stock options to the Named Executive
Officers during the year ended December 31, 2002. The Company does not maintain
an option or other stock based plan that provides for the grant of stock
appreciation rights (&#147;SARs&#148;). </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>85</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


                                             <H1 align=center ><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>    Individual Grants</b></FONT></H1>
<HR color="black" width=95% SIZE=1 NOSHADE>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Potential Realizable Value</FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number of</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Percent of</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> at Assumed Annual Rates of</FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Total Options/</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Stock Price Appreciation</FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Underlying</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> SARs Granted to </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> for Option Term (1)</FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Options/ SARs</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employees in</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Exercise Price </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Expiration</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Name</FONT><HR width=80% align=left color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Granted </FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fiscal Year </FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  ($ PerShare)</FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">     Date</FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 5% ($)</FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10% ($)</FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carl C. Gregory, III</FONT></TD>
     <TD WIDTH="13%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,333</FONT></TD>
     <TD WIDTH="14%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25%</FONT></TD>
     <TD WIDTH="14%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.51</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9/11/12</FONT></TD>
     <TD WIDTH="13%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 66,667</FONT></TD>
     <TD WIDTH="9%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 257,522</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Barry R. Barkley</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,333</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25%</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.51</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9/11/12</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 66,667</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 257,522</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">J. Brandon Black</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208,333</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25%</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$0.51</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9/11/12</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 66,667</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 257,522</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robin R. Pruitt</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John R. Treiman</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">N/A</FONT></TD></TR>
</TABLE>


<HR align=left width=20% color="black" SIZE=1 NOSHADE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</font></P></TD>
<TD WIDTH=95%><P><FONT>  <FONT FACE="Times New Roman, Times, Serif" SIZE="2">  These rates of  appreciation  have been  provided  for  illustrative  purposes  only.  Such rates do not  represent  expected or
       forecasted appreciation.</font></font></P>
</TD>
</TR>
</TABLE>



<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Options</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets
forth information concerning option exercises and option holdings for fiscal
2002 with respect to the Named Executive Officers: </FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number of Securities</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Shares</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Underlying Unexercised</FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT>Value of Unexercised</TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Acquired</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Options/SARs at</FONT></TH>

     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">In-The-Money Options/</FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">On  </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Value </FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fiscal Year-End </FONT></TH>

     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">SARs at Fiscal Year-End(1)</FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Name </FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercise </FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Realized</FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercisable</FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Unexercisable </FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exercisable </FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Unexercisable</FONT><HR width=80% color="black" SIZE=2 NOSHADE></TH></TR>

<TR VALIGN="BOTTOM">
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carl C. Gregory, I</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">None</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD WIDTH="14%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">150,000</FONT></TD>
     <TD WIDTH="14%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">358,333</FONT></TD>
     <TD WIDTH="14%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 15,000</FONT></TD>
     <TD WIDTH="14%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$137,916</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Barry R. Barkley</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">None</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">308,333</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 10,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$132,916</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">J. Brandon Black</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">None</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">308,333</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 10,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$132,916</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robin R. Pruitt</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">None</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;12,500</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;62,500</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;  1,250</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp; &nbsp; 6,250</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John R. Treiman</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">None</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;37,500</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;37,500</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;  3,750</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$&nbsp;&nbsp;&nbsp;  3,750</FONT></TD></TR>
</TABLE>

<HR align=left width=20% color="black" SIZE=1 NOSHADE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1)</font> </P></TD>
<TD WIDTH=95%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Options are considered "in the money" if the fair market value of the  underlying  securities  exceeds the exercise price of the
       options.  These values are based on the  December 31, 2002 closing  price of the Common Stock of $1.10 per share on the Over the
       Counter  Bulletin  Board,  less the per share  exercise  price.  The options might not be exercised and the value,  if any, will
       depend on the actual share price at the time of exercise.</font></font></P>
</TD>
</TR>
</TABLE>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>86</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>




<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b> <i>Section 16(a) Beneficial Ownership Reporting Compliance</i></b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based solely upon a review of Forms 3, 4 and 5 and amendments thereto, the Company reports the following:</font></P>


<TABLE CELLPADDING="2" CELLSPACING="0" BORDER="0" WIDTH="70%">

<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">No. Transactions</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">   </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> No. of Late</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Not Timely</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Known</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH align=left><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Reporting Person</u></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>Reports</u> </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u> Reported</u></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  <u>failures to file</u></FONT></TH>
     </TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="12%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard A. Mandell</FONT></TD>
     <TD WIDTH="19%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD WIDTH="19%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD WIDTH="20%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carl C. Gregory, III</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Barry R. Barkley</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">J. Brandon Black</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD></TR>
</TABLE>
<br><br><br><br><br>
<A HREF="#Index">Index</A>
<A NAME="Itembb"></A>
              <P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <b>Item 12 - Security Ownership of Certain
Beneficial Owners and Management and Related <br>Stockholder Matters</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets
forth certain information concerning the beneficial ownership of the
Company&#146;s Common Stock as of March 25, 2003, by: (i) each director of the
Company, (ii) the Named Executive Officers, (iii) each person who is known by
the Company to be the beneficial owner of more than five percent (5%) of the
outstanding Common Stock, and (iv) all executive officers and directors as a
group. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Unless otherwise indicated,
the address of each of the listed stockholders is 5775 Roscoe Ct., San Diego,
California 92123. The number of shares includes shares of common stock owned of
record by such person&#146;s minor children and spouse and by other related
individuals and entities over whose shares of common stock such person has
custody, voting control or the power of disposition. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>87</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number of Shares</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">of Common Stock</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Percentage of Common</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Beneficially </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Stock Beneficially</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name &amp; Address of Beneficial Owner </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Owned(1) </FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Owned</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Consolidated Press International Holdings</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,199,396&nbsp;</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">54.3%</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Limited (2)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">54-58 Park Street, Sydney</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">NSW 2001, Australia</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nelson  Peltz (3)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,856,012&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">43.6%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">c/o Triarc Companies, Inc.</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">280 Park Avenue</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">New York, NY 10017</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Triarc Companies, Inc. (4)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,382,544&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25.7%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">280 Park Avenue</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">New York, NY 10017</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">DWG Acquisition Group, L.P. (5)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,382,544&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25.7%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">c/o Triarc Companies, Inc.</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">280 Park Avenue</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">New York, NY 10017</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Madison West Associates Corp. (6)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,281,269&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24.9%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">c/o Triarc Companies, Inc.</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">280 Park Avenue</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">New York, NY 10017</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR><TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Neale M. Albert (7)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,743,816&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">21.1%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">c/o Paul, Weiss, Rifkind, Wharton &amp; Garrison</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1285 Avenue of the Americas</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">New York, NY 10019</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR><TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Frank I. Chandler (8)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,000,579&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13.5%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Eric D. Kogan (9)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">475,158&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6.2%</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Raymond Fleming</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard A. Mandell (10)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18,334&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*&nbsp;</FONT></TD></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Peter W. May (11)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,539,042&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">35.0%</FONT></TD></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robert M. Whyte (12)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,283,100&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15.3%</FONT></TD></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Alexander Lemond (13)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">161,213&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.2%</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Neville J. Katz</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">44,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*&nbsp;</FONT></TD></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carl C. Gregory, III</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">225,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.9%</FONT></TD></TR>
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     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
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<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR><TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Barry R. Barkley</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">150,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.0%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR><TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">J. Brandon Black</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">150,000&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.0%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR><TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robin R. Pruitt</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,500&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR><TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">John R. Treiman</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">56,250&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR><TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">All directors and executive officers of the</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Company as a group (14 persons) (14)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,205,521&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">51.5%</FONT></TD></TR>
</TABLE>

<HR align=left width=20% color="black" SIZE=1 NOSHADE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">*Less than one percent.</FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>88</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD VALIGN=TOP WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1) </font></P></TD>
<TD  VALIGN=bottom WIDTH=97%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2">   The numbers and  percentages  shown include the shares of Common Stock actually  beneficially  owned as of March 25, 2003, and
      the shares of Common  Stock that the person or group had the right to acquire  within 60 days of such date.  In  calculating  the
      percentage of ownership,  all shares of Common Stock that the identified  person or group had the right to acquire within 60 days
      of March 25,  2003,  upon the  exercise of options or warrants  or the  conversion  of  convertible  securities  are deemed to be
      outstanding for the purpose of computing the percentage of the shares of Common Stock owned by such person or group,  but are not
      deemed to be outstanding for the purpose of computing the percentage of the shares of Common Stock owned by any other person.</font></font></P>
</TD>
</TR>
</TABLE>

<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR >
<TD VALIGN=TOP WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2)</font>  </P></TD>
<TD  VALIGN=bottom WIDTH=97%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2">  According to Amendment No. 4 to Schedule 13D filed on April 18, 2002 by  Consolidated  Press  International  Holdings  Limited
      ("CPIHL") and C. P. International  Investments Limited ("CPII") to further supplement and amend the Schedule 13D originally filed
      by CPIHL and CPII on February 22, 2000, as  supplemented  and amended by Amendment No. 1 dated March 22, 2001, by Amendment No. 2
      dated August 28, 2001 and by Amendment No. 3 dated February 27, 2002, each of CPII and CPIHL may be deemed the beneficial  owners
      of these shares.  The shares reported  include  2,199,396 shares directly owned by CPII and  4,000,000  shares  issuable  upon
      conversion of the 400,000  shares of the Company's  Series A preferred  stock held by CPII.  CPIHL and CPII each share voting and
      dispositive power with respect to the 2,199,396 shares of Common Stock and the 400,000 shares of Series A Preferred Stock.</font>
</font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3)</font>   </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>     <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> According to Amendment No. 1 to Schedule 13D filed on November 1, 2002 by Madison West Associates  Corp.  ("Madison"),  Triarc
      Companies,  Inc.  ("Triarc"),  Nelson Peltz,  Peter W. May, Neale M. Albert and DWG Acquisition Group, L.P. ("DWG") to supplement
      and amend the Schedule 13D  originally  filed by such reporting  persons on March 4, 2002 (as so  supplemented  and amended,  the
      "Madison West 13D"),  Mr. Peltz is a co-trustee of the Nelson Peltz Children's Trust (the "NP Trust") and in such capacity shares
      voting and  dispositive  power over the 602,318 shares of Common Stock  directly  owned by the NP Trust and the 1,871,150  shares
      issuable  upon the  conversion of the Series A Preferred  Stock owned by the Peltz Family  Limited  Partnership.  As the indirect
      beneficial  owner of  approximately  34.7% of the  outstanding  voting  common  stock of  Triarc,  Mr.  Peltz  shares  voting and
      dispositive power with Triarc,  Mr. May and DWG over the 2,382,544 shares of Common Stock  beneficially owned by Triarc (see note
      (4) below). As a result,  pursuant to Rule 13d-3 of the Securities  Exchange Act of 1934 ("Rule 13d-3"),  Mr. Peltz may be deemed
      the indirect  beneficial  owner of (i) the 602,318  shares of Common Stock  directly  owned by the NP Trust,  (ii) the  1,871,150
      shares of Common Stock  issuable to the Peltz Family  Limited  Partnership  upon the  conversion of the Series A Preferred  Stock
      owned by the Peltz Family  Limited  Partnership;  and (iii) the 2,382,544  shares of Common Stock  beneficially  owned by Triarc,
      which would, in the aggregate,  constitute  approximately  43.6% of the Company's  outstanding  shares of Common Stock. Mr. Peltz
      disclaims beneficial ownership of such shares.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4) </font> </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2">  According to the Madison West 13D, Triarc may be deemed the beneficial  owner of 2,382,544  shares of Common Stock,  including
      (i) 535,609 shares of Common Stock directly owned by Madison West;  (ii) 100,000 shares of Common Stock issuable upon exercise of
      a warrant (the "Triarc  Warrant")  exercisable at a price of $.01 per share (such warrant is exercisable  immediately and expires
      on January 12,  2005) and 1,275  shares  issuable  upon  exercise  of a warrant  issued to Triarc  pursuant to the  anti-dilution
      provisions of the Triarc Warrant (collectively,  the "Triarc Warrants"); and (iii) 1,745,660 shares of Common Stock issuable upon
      conversion of the Series A Preferred  Stock  acquired by Madison  West.  Assuming  exercise by Triarc of the Triarc  Warrants for
      101,275  shares of the Common Stock and the conversion by Madison West of its Series A Preferred  Stock into 1,745,660  shares of
      the Company's Common Stock, the aggregate holdings of Triarc would constitute  approximately  25.7% of the Company's  outstanding
      shares of Common Stock.  Triarc  shares with Madison  West,  Mr.  Peltz,  Mr. May and DWG voting and  dispositive  power over the
      2,281,269  shares of Common Stock  beneficially  owned by Madison West and the 101,275  shares of Common Stock issuable to Triarc
      upon exercise of the Triarc Warrants.</font></font></P>
</TD>
</TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>89</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR >
<TD VALIGN=TOP WIDTH=3% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5)</font> </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2">  According  to the Madison  West 13D, DWG is the direct  beneficial  owner of  approximately  29.2% of the  outstanding  voting
      common stock of Triarc,  and in such capacity shares with Mr. Peltz and Mr. May voting and  dispositive  power over the 2,382,544
      shares of Common Stock beneficially owned by Triarc (see note (4) above). As a result,  pursuant to Rule 13d-3, DWG may be deemed
      the indirect  beneficial owner of 2,382,544 shares of Common Stock, which would constitute  approximately  25.7% of the Company's
      outstanding shares of Common Stock.  DWG disclaims beneficial ownership of such shares.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR >
<TD VALIGN=TOP WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6)</font>  </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>    <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> According  to the Madison West 13D,  Madison West may be deemed the  beneficial  owner of  2,281,269  shares of Common  Stock,
      including (i) 535,609 shares of Common Stock  directly owned by Madison West; and (ii) 1,745,660  shares of Common Stock issuable
      upon conversion of the Series A Preferred  Stock acquired by Madison West.  Assuming the conversion by Madison West of the Series
      A  Preferred  Stock into  1,745,660  shares of the  Common  Stock,  the  aggregate  holdings  of  Madison  West would  constitute
      approximately  24.9% of the Company's  outstanding  shares of Common Stock.  Madison West shares with Triarc,  Mr. Peltz, Mr. May
      and DWG voting and dispositive power over the 2,281,269 shares of Common Stock beneficially owned by Madison West.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(7)</font> </P></TD>
<TD  VALIGN=bottom WIDTH=97%><P><FONT>     <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> According  to the Madison West 13D, Mr.  Albert is a co-trustee  of each of the NP Trust,  the Jonathan P. May 1998 Trust (the
      "JM Trust") and the Leslie A. May 1998 Trust (the "LM Trust") (see note (10) below),  and in such capacity Mr. Albert shares with
      Mr. Peltz voting and  dispositive  power over the 602,318 shares of Common Stock directly owned by the NP Trust,  and shares with
      Mr. May voting and dispositive  power over the 150,579 shares of Common Stock directly owned by the JM Trust,  the 150,579 shares
      of Common Stock directly  owned by the LM Trust,  the 420,170 shares of Common Stock issuable upon the conversion of the Series A
      Preferred  Stock  owned by the JM Trust and the 420,170  shares of Common  Stock  issuable  upon the  conversion  of the Series A
      Preferred  Stock owned by the LM Trust.  As a result,  pursuant to Rule 13d-3,  Mr. Albert may be deemed the beneficial  owner of
      1,743,816 shares,  which would constitute  approximately  21.1% of the Company's  outstanding  shares of Common Stock. Mr. Albert
      disclaims beneficial ownership of such shares.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR >
<TD VALIGN=TOP WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8)</font>  </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>    <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Includes 12,353 shares directly owned and 988,226 shares owned by the Chandler Family Limited  Partnership.  Mr.  Chandler,  a
      former Vice Chairman and co-founder of the Company, has voting power over the shares owned by the Partnership.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (9)</font></P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> &nbsp;&nbsp;&nbsp;  Includes  169,158  shares of Common Stock and 306,000  shares of Common Stock  issuable upon  conversion of Series A Preferred
      Stock.</font></font></P>
</TD>
</TR>
</TABLE>
<br>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD VALIGN=TOP WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10)</font>  </P></TD>
<TD  VALIGN=bottom WIDTH=97%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> &nbsp;&nbsp;&nbsp;Includes  10,000  shares of Common Stock  directly  owned and 8,334 shares of Common Stock  issuable  upon  exercise of vested
      stock options.</font></font></P>
</TD>
</TR>
</TABLE>
<br>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>90</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(11) </font>  </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>  <FONT FACE="Times New Roman, Times, Serif" SIZE="2"> According  to the Madison West 13D, Mr. May is a  co-trustee  of each of the JM Trust and the LM Trust,  and in such  capacity
      Mr. May shares voting and  dispositive  power with Mr. Albert over the 150,579  shares of Common Stock  directly  owned by the JM
      Trust,  the 150,579  shares of Common Stock  directly  owned by the LM Trust,  the 420,170  shares of Common Stock issuable to JM
      Trust upon the  conversion of the Series A Preferred  Stock owned by the JM Trust and the 420,170 shares of Common Stock issuable
      to LM Trust upon the  conversion  of the  Series A  Preferred  Stock  owned by the LM Trust  (see note (7)  above).  Mr. May also
      beneficially  owns  15,000  shares of Common  Stock that he  acquired  through a  brokerage  transaction  and has sole voting and
      dispositive  power over such shares.  As the beneficial  owner of approximately  32.9% of the outstanding  voting common stock of
      Triarc,  Mr. May shares with Triarc,  Mr. Peltz and DWG voting and  dispositive  power over the 2,382,544  shares of Common Stock
      beneficially  owned by Triarc (see note (4) above).  As a result,  pursuant to Rule 13d-3,  Mr. May may be deemed the  beneficial
      owner of (i) the 150,579 shares of Common Stock directly owned by the JM Trust,  (ii) the 150,579 shares of Common Stock directly
      owned by the LM Trust,  (iii) the  420,170  shares of Common  Stock  issuable  to JM Trust  upon the  conversion  of the Series A
      Preferred  Stock owned by the JM Trust,  (iv) the 420,170  shares of Common Stock issuable to LM Trust upon the conversion of the
      Series A Preferred Stock owned by the LM Trust, (v) the 2,382,544 shares of Common Stock  beneficially  owned by Triarc, and (vi)
      the 15,000 shares of Common Stock owned directly by Mr. May, which would,  in the aggregate,  constitute  approximately  35.0% of
      the Company's  outstanding  shares of Common  Stock.  Mr. May  disclaims  beneficial  ownership of all such shares other than the
      15,000 shares of Common Stock that he owns directly.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR >
<TD VALIGN=TOP WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(12)</font> </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>   <FONT FACE="Times New Roman, Times, Serif" SIZE="2">  According  to Amendment  No. 1 to Schedule 13D filed on April 18, 2002 by Robert  Michael  Whyte to  supplement  and amend the
      Schedule 13D  originally  filed on March 4, 2002 by Mr. Whyte and updated to reflect open market  purchases by Mr. Whyte reported
      on Form 4, Mr. Whyte may be deemed the  beneficial  owner of  1,283,100  shares of Common  Stock,  consisting  of 283,100  shares
      directly owned and 1,000,000  shares of Common Stock issuable on conversion of Series A Preferred Stock.  Assuming  conversion of
      the Series A Preferred Stock into 1,000,000  shares of the Company's  Common Stock,  Mr. Whyte may be deemed to beneficially  own
      approximately 15.3% of the Company's outstanding shares of Common Stock</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(13)</font>  </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>    <FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Includes 133,413 shares directly owned and 27,800 shares of Common Stock issuable on conversion of Series A Preferred Stock.</font></font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=left><P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(14)</font> </P></TD>
<TD VALIGN=bottom WIDTH=97%><P><FONT>     <FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Excludes the 2,382,544 shares beneficially owned by Triarc.   See note (4) above.</font></font></P>
</TD>
</TR>
</TABLE>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>91</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>








<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>Securities Authorized for Issuance Under Equity Compensation Plans</i></b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table gives information about the Company's existing equity compensation plan
as of December 31, 2002.</font></P>







<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="80%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Number of securities</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Number of securities </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">remaining available for</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">to be issued upon</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Weighted-average</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">future issuance under</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> exercise of</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">exercise price of</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">equity compensation plans</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">outstanding options,</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">outstanding options, </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (excluding securities</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Plan category </FONT><HR width=80% color="black" SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">warrants and rights  </FONT><HR width=80% color="black" SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">warrants and rights </FONT><HR width=80% color="black" SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">reflected in column (a))</FONT><HR width=80% color="black" SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(a)</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(b)</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(c)</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Equity compensation</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp; &nbsp;</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="25%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">plans approved by</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,820,999</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$        0.76</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">779,001</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">security holders</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Equity compensation</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">plans not approved</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&#150;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">by security holders</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,820,999</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$        0.76</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">779,001</FONT></TD></TR>
</TABLE>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>92</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<A HREF="#Index">Index</A>
<A NAME="Itemcc"></A>

                                      <P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <b>Item 13 - Certain Relationships and Related Transactions</b></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On January 12, 2000, we
issued $10 million in principal amount of 12% Series No. 1 Senior Notes to an
institutional investor. The Senior Notes are unsecured obligations of the
Company but are guaranteed by Triarc, a shareholder of the Company. Triarc
beneficially owns approximately 25.7% of the outstanding common stock of the
Company. In connection with the issuance of the Senior Notes, the Company issued
warrants to the institutional investor and Triarc to acquire up to 428,571 and
100,000 shares, respectively, of the Company&#146;s common stock of at an
exercise price of $0.01 per share. Each of the warrant agreements pursuant to
which the foregoing warrants were issued contains anti-dilution provisions. In
addition, the Company paid a fee to Triarc in the amount of $0.2 million in
consideration of Triarc&#146;s guarantee of this indebtedness. The Company
engaged an independent valuation firm to determine the allocation of the $10
million principal amount between the Senior Notes and the warrants. The results
of the valuation valued the warrants at approximately $3.05 per share. This
valuation of $3.05 per share results in the warrants being included as a
component of stockholders&#146; equity in the amount of $1.6 million with the
same amount recorded as a reduction of the $10 million note payable. This debt
discount is being amortized as interest expense over the five-year exercise
period of the warrants. In addition, the Senior Notes require semi-annual
interest payments each January 15 and July 15 except that during the first two
years the Senior Notes are outstanding the interest may be repaid in kind at the
Company management&#146;s option through issuance of additional 12% Senior
Notes. On February 22, 2002, the institutional investor forgave $5.3 million of
outstanding debt, consisting of a $2.8 million reduction in the original note
balance, the forgiveness of $1.9 million in Payment-in-Kind Notes, and the
forgiveness of $0.6 million in interest accrued through December 31, 2001, and
reduced its warrant position by 200,000 warrants. In conjunction with the debt
forgiveness, capitalized loan costs totaling $0.1 million and debt discount
totaling $0.5 million were written-off.

 The debt forgiveness was recorded net of the debt discount related to the warrants cancelled and deferred loan costs totaling $0.7
million in the aggregate.  The effect of the debt forgiveness was recorded by the Company as a capital contribution since it was
facilitated by various equity holders of the Company through their relationship with the lender resulting from prior investment
banking and financial advisory services rendered to such equity holders by the lender and its affiliates.
Furthermore, the terms of the Senior Notes and Payment-in-Kind Notes were
revised. The Senior Notes now bear interest at 6% per annum until July 15, 2003,
and 8% per annum from July 16, 2003 to January 15, 2007, when the entire unpaid
amount is due. The Senior Notes require semi-annual interest payments on January
15 and July 15. At the Company&#146;s option, interest due through July 15, 2003
may be repaid with Payment-in-Kind Notes. Such notes would accrue interest at 6%
per annum through July 15, 2003 and 8% per annum thereafter and would be due
July 1, 2005. The Company elected to make the first two payments in cash. </FONT></P>
<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>93</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Effective October 31, 2000,
the Company executed an agreement with certain of its affiliates for a $2.0
million stand-by working capital line of credit secured by substantially all of
the Company&#146;s assets and those of its subsidiaries. In connection with this
agreement, the lenders received 250,000 warrants to acquire the Company&#146;s
common stock at $0.01 per share. As of December 31, 2001, when the stand-by line
expired, no indebtedness existed. The fair value of the warrants, $0.1 million,
was accounted for by recording deferred loan costs with an offset to additional
paid-in capital as a component of stockholders&#146; equity. All 250,000
warrants were exercised on April 16, 2002. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has extended a
facility with Bank of America, NA, formerly NationsBank, NA, for a revolving
line of credit of up to $15.0 million that matures April 15, 2003. Some of our
directors, stockholders and affiliates have guaranteed this facility, including
Messrs. May, Chandler, Peltz and Kogan, directors of Encore Capital, the
Chandler Family Limited Partnership, Triarc, Consolidated Press Holdings
Limited, Peter Stewart, and Nigel Frazer. Triarc has deposited $15.0 million of
highly liquid United States government agency securities in a custodial account.
Such securities are subject to set off under certain circumstances if the
parties to the guarantees and related agreements fail to perform their
obligations thereunder.

As of March 25, 2003,  there is $1.9  million  outstanding  under the line of credit.  The lender has agreed in principle to extend the
maturity  date of the line of credit at a reduced  principal  amount of $5.0  million  through  April 15,  2004.  Such  reduced line of
credit would  continue to be guaranteed by the  directors,  stockholders  and  affiliates  referred to above.  In connection  with such
guarantee,  an aggregate fee of up to $75,000 per quarter would be paid to all or some of such parties.  At December 31, 2001 and 2002,
the Company had available unused lines of credit in the amount of $0.3 million and $11.1 million, respectively.

</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On February 22, 2002,
certain existing stockholders and their affiliates (the &#147;Purchasers&#148;)
made an additional $5.0 million investment in Encore Capital Group, Inc.
Immediately prior to such investment, the Purchasers on a collective basis
beneficially owned in excess of 50% of the Company&#146;s common stock. In a
related transaction, one of the Company&#146;s principal lenders forgave $5.3
million of outstanding debt (see discussion above). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Purchasers purchased
1,000,000 shares of the Company&#146;s Series A Senior Cumulative Participating
Convertible Preferred Stock (the &#147;Series A Preferred Stock&#148;) at a
price of $5.00 per share. Each share of Series A Preferred Stock is convertible
at the option of the holder at any time into shares of common stock at a
conversion price of $.50 per share of common stock, subject to customary
anti-dilution adjustments. The Series A Preferred Stock has a cumulative
dividend, payable semi-annually. Until February 15, 2004, dividends are payable
in cash and/or additional Series A Preferred Stock, at the Company&#146;s
option, at the rate of 10.0% per annum. Thereafter, dividends will be payable
only in cash, at a rate of 10.0% per annum. The dividend rate increases to 15.0%
per annum in the event of a qualified public offering, a change of control (each
as defined) or the sale of all or substantially all of the assets of the
Company. In the event dividends are not declared or paid, the dividends will
accumulate on a compounded basis. The Series A Preferred Stock has a liquidation
preference equal to the sum of the stated value of the Series A Preferred Stock
($5.0 million in the aggregate) plus all accrued and unpaid dividends thereon
and a participation payment equal to shares of common stock at the conversion
price and/or such other consideration that would be payable to holders of the
Series A Preferred Stock if their shares had been converted into shares of the
Company&#146;s common stock immediately prior to the liquidation event. </FONT></P>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>94</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Series A Preferred
Stock ranks senior to the common stock and any other junior securities with
respect to the payment of dividends and liquidating distributions. The Company
is prohibited from issuing any capital stock that ranks senior to the Series A
Preferred Stock without the consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Upon the occurrence of a
qualified public offering, a change in control, or a sale of the Company, the
Company may, by decision of the then independent members of the Board of
Directors, redeem the outstanding Series A Preferred Stock in whole but not in
part at an aggregate redemption price equal to the $5.0 million liquidation
preference plus the participation payment. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The holders of the Series A
Preferred Stock are entitled to vote on an as converted basis with the holders
of the common stock as a single class and have the right to vote as a class on
certain specified matters. In the event that the Company fails to pay dividends
for either two consecutive semi-annual periods or any four semi-annual periods,
the Purchasers are entitled to designate two directors to serve on the
Company&#146;s Board of Directors for as long as at least 10% of the shares of
the Series A Preferred Stock remain outstanding. The holders of the Series A
Preferred Stock also have been granted registration rights in respect of the
common stock underlying the Series A Preferred Stock. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The investment by the
Purchasers was approved by the Company&#146;s board of directors, following the
recommendation of a special committee consisting of the Company&#146;s
independent director formed specifically for the purpose of evaluating and
considering the transaction. The special committee was advised by an independent
financial advisor and by independent legal counsel. </FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>95</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>
<A HREF="#Index">Index</A>
<A NAME="Itemdd"></A>
<A NAME="Itemee"></A>


                                                      <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>ENCORE CAPITAL GROUP, INC.</b></font></H1>

                                                                <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Part IV</b></font></H1>

                                                 <P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <b> Item 14 - Controls and Procedures</b></font></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our periodic reports filed with the Securities and
Exchange Commission (&#147;SEC&#148;) is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC and
that such information is accumulated and communicated to our management as
appropriate to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, our management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based on their most recent
evaluation, which was completed within 90 days of the filing of this Annual
Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer
believe that our disclosure controls and procedures (as defined in Rules 13a-14
and 15d-14 of the Securities Exchange Act of 1934, as amended) are effective.
There were no significant changes in internal controls or in other factors that
could significantly affect these internal controls subsequent to the date of
their most recent evaluation. </FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>96</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>


<A HREF="#Index">Index</A>
<A NAME="Itemff"></A>


                            <P ALIGN=CENTER> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Item 15 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K</b></font></P>

    <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> (a)</font> </TD>
<TD WIDTH=15% ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </font> </TD>
<TD WIDTH=80%> <FONT FACE="Times New Roman, Times, Serif" SIZE="2">Consolidated Financial Statements.</font>
</TD>
</TR>
</TABLE>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following consolidated financial statements of Encore Capital Group, Inc. are filed as part of this Form 10-K.</font></P>




<TABLE CELLPADDING="1" CELLSPACING="0" BORDER="0" WIDTH="70%">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="96%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD WIDTH="4" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page</font></TD></TR>

<TR bgcolor=aqua VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report of Independent Auditors, BDO Seidman, LLP</font></TD>
     <TD  ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;45</font></TD></TR>
<TR  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report of Independent Auditors, Ernst &amp; Young LLP</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;46</font></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audited Financial Statements</font></TD>
     <TD ALIGN="RIGHT">&nbsp;</TD></TR>

<TR bgcolor=aqua  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Financial Condition</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;47</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Operations and Comprehensive Income (Loss)</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;48</font></TD></TR>
<TR bgcolor=aqua  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Stockholders' Equity (Deficit)</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;49</font></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Cash Flows</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;50</font></TD></TR>
<TR bgcolor=aqua  VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes to Consolidated Financial Statements</font></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;52</font></TD></TR>
</TABLE>

<br><br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=bottom>
<TD WIDTH=5% ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(b)</FONT> </TD>
<TD WIDTH=15% ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Reports on Form 8-K.  </FONT></TD>
<TD WIDTH=80%></TD></TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=left></TD>
<TD WIDTH=5% ALIGN=left></TD>
<TD align=left WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">         On November 12, 2002, the Company filed a Current Report on Form 8-K, which included information and exhibits under
         Item 7 of such form.

</FONT></TD></TR>
</TABLE><br>
 <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=left></TD>
<TD WIDTH=5% ALIGN=left></TD>
<TD align=left WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> &nbsp;&nbsp;        On March 17, 2003, the Company filed a Current Report on Form 8-K, which included exhibits under Item 9 of such form.

</FONT></TD></TR>
</TABLE><br>


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<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(c)  </FONT></TD>
<TD WIDTH=10% ALIGN=left></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exhibits.</FONT></TD></TR>
</TABLE><br>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;2</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Plan of Merger (incorporated by reference to Exhibit 2 to Amendment No. 2 to the Company&#146;s Registration Statement on</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form S-1 filed on June 14, 1999 (&#147;Amendment No. 2&#148;))</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;3.1</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 2)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;3.2</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.1 to the Company&#146;s Current Report on Form 8-K filed on April 4, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;3.3</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certificate of designation relating to the Series A Senior Cumulative Participating Convertible Stock (incorporated</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">by reference to Exhibit 3.1 to the Company&#146;s Current Report on Form 8-K filed on February 25, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;3.4</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By-laws (incorporated by reference to Exhibit 3.1 to to the Company&#146;s Current Report on Form 8-K filed on November 12, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;4.1</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Specimen of Share Certificate of Series A Senior Cumulative Participating Convertible Stock (incorporated by</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">reference to Exhibit 4.1 to the Company&#146;s Current Report on Form 8-K filed on February 25, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;4.2</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchase Agreement dated as of February 15, 2002, between the Company and several purchasers listed on Schedule A</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">thereto (incorporated by reference to Exhibit 4.2 to the Company&#146;s Current Report on Form 8-K filed on February 25, 2002</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;4.3</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration Rights Agreement, dated as of February 21, 2002, between the Company and the several Purchasers listed</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">on Schedule thereto (incorporated by reference to Exhibit 4.3 to the Company&#146;s Current Report on Form 8-K filed on February 25, 2002)</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;4.4</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Warrant issued to ING (U.S.) Capital LLC (&#147;ING&#148;) dated December 31, 2001 (incorporated by reference to Exhibit 4.4</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">to the Company&#146;s Current Report on Form 8-K filed on February 25, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.1</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Indenture and Servicing Agreement relating to the Warehouse Facility (incorporated by reference to Exhibit 10.4 to</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amendment No. 1 to the Company&#146;s Registration Statement on Form S-1 filed on May 14, 1999 (&#145;Amendment No. 1&#148;))</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.2</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">First Amendment to Indenture and Servicing Agreement relating to the Warehouse Facility (incorporated by reference</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">to Exhibit 10.4.1 to Amendment No. 1)</FONT></TD></TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>97</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.3</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Second Amendment to Indenture and Servicing Agreement relating to the Warehouse Facility (incorporated by reference</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">to Exhibit 10.1 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended September 30, 2000 filed on</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">November 14, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.4</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Third Amendment to Indenture and Servicing Agreement relating to the Warehouse Facility (incorporated by reference</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">to Exhibit 10.2 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended September 30, 2000 filed on</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">November 14, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.5</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fourth Amendment to Indenture and Servicing Agreement relating to the Warehouse Facility (incorporated by reference</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">to Exhibit 10.3 to the Company&#146;s Current Report on Form 8-K filed on November 12, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.6</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Receivables Contribution Agreement relating to the Warehouse Facility (incorporated by reference to Exhibit 10.5 to</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amendment No. 1)</FONT></TD></TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=9% ALIGN=left><P>   <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.7</font></P></TD>
<TD WIDTH=91%><P>
            <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Insurance and Reimbursement  Agreement relating to the Warehouse Facility  (incorporated by reference to Exhibit 10.6
                to Amendment No. 1)</font></P>
</TD>
</TR>
</TABLE>
        <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.8</font> </P></TD>
<TD WIDTH=92%><P>
            <FONT FACE="Times New Roman, Times, Serif" SIZE=2> Note  Purchase  Agreement  dated as of January 12, 2000  between the Company and ING  (incorporated  by  reference to
                 Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed on January 21, 2000)</font></P>
</TD>
</TR>
</TABLE>


         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
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<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.9</font>  </P></TD>
<TD WIDTH=92%><P>
          <FONT FACE="Times New Roman, Times, Serif" SIZE=2> Amendment  No. 1 dated as of April 28, 2000 to Note  Purchase  Agreement  dated as of January  12,  2000  between the
                  Company and ING  (incorporated  by reference to Exhibit 10.1 to the Company&#146;s  Quarterly  Report on Form 10-Q for the
                  period ended March 31, 2000 filed on May 22, 2000)</font></P>
</TD>
</TR>
</TABLE>
         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.10 </font> </P></TD>
<TD WIDTH=92%><P>
          <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amendment  No. 2 dated as of December 31, 2001 to the Note  Purchase  Agreement  dated as of January 12, 2000 between
                 the Company and ING  (incorporated by reference to Exhibit 10.2 to the Company&#146;s  Current Report on Form 8-K filed on
                February 25, 2002)</font></P>
</TD>
</TR>
</TABLE>

         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.11 </font></P></TD>
<TD WIDTH=92%><P>
           <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Letter  Agreement  dated  February 21, 2002 among ING, the Company and the  purchasers of Series A Senior  Cumulative
                Participating  Convertible Preferred Stock (incorporated by reference to Exhibit 10.3 to the Company&#146;s Current Report
                on Form 8-K filed on February 25, 2002)</font></P>
</TD>
</TR>
</TABLE>


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<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;&nbsp;&nbsp;10.12</font></P></TD>
<TD WIDTH=92%><P>
           <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Promissory Note of the Company in favor of ING dated December 31, 2001  (incorporated by reference to Exhibit 10.1 to
           the Company&#146;s Current Report on Form 8-K filed on February 25, 2002)</font></P>
</TD>
</TR>
</TABLE>

         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=left><P>  <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.13</font></P></TD>
<TD WIDTH=92%><P>
           <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Warrant  Agreement  dated as of January 12, 2000  between the Company and ING  (incorporated  by reference to Exhibit
                 10.2 to the Company&#146;s Current Report on Form 8-K filed on January 21, 2000)</font></P>
</TD>
</TR>
</TABLE>
         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.14 </font> </P></TD>
<TD WIDTH=92%><P>
         <FONT FACE="Times New Roman, Times, Serif" SIZE=2> Warrant  Agreement  dated as of  January  12,  2000  between  the  Company  and  Triarc  Companies,  Inc.  (&#147;Triarc&#148;)
               (incorporated by reference to Exhibit 10.3 to the Company&#146;s Current Report on Form 8-K filed on January 21, 2000)</font></P>
</TD>
</TR>

</TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.15</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration Rights Agreement dated as of January 12, 2000 between the Company and ING (incorporated by reference to</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exhibit 10.4 to the Company&#146;s Current Report on Form 8-K filed on January 21, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.16</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration Rights Agreement dated as of June 30, 1999 among the Company, C.P. International Investments Limited,</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">MCM Holding Company, LLC, and other persons (incorporated by reference to Exhibit 10.5 to the Company&#146;s Current</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Report on Form 8-K filed on January 21, 2000)</FONT></TD></TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>98</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.17</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Subsidiary Guaranty dated as of January 12, 2000 (incorporated by reference to Exhibit 10.6 to the Company&#146;s Current</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Report on Form 8-K filed on January 21, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.18</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Guaranty and Option Agreement dated as of January 12, 2000 between Triarc and ING (incorporated by reference to</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exhibit 10.7 to the Company&#146;s Current Report on Form 8-K filed on January 21, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.19</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net Industrial Building Lease by and between Midland Credit Management, Inc. and 4405 E. Baseline Road Limited</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Partnership for the property located at 4310 E. Broadway Road, Phoenix, Arizona (the &#147;Office Lease&#148;) (incorporated</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">by reference to Exhibit 10.12 to Amendment No. 1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.20</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">First Amendment to the Office Lease (incorporated by reference to Exhibit 10.13 to Amendment No. 1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.21</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Second Amendment to the Office Lease (incorporated by reference to Exhibit 10.14 to Amendment No. 1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.22</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Third Amendment to the Office Lease (incorporated by reference to Exhibit 10.15 to Amendment No. 1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.23</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fourth Amendment to the Office Lease (incorporated by reference to Exhibit 10.16 to Amendment No. 1)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.24</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sixth Amendment to Office Lease (incorporated by reference to Exhibit 10.1 to the Company&#146;s Current Report on Form</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8-K filed on November 12, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.25</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Option to Extend Office Lease dated October 1, 2002 (incorporated by reference to Exhibit 10.2 to the Company&#146;s</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Current Report on Form 8-K filed on November 12, 2002)</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.26</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Lease dated September 12, 1994 for the property located at 5775 Roscoe, San Diego, California (incorporated by</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">reference to Exhibit 10.1 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended June 30, 2002 filed on August 14, 2002)</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.27</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Extension to Lease dated April 17, 2000 with respect to the property located at 5775 Roscoe, San Diego, California</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(incorporated by reference to Exhibit 10.2 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended June</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">30, 2002 filed on August 14,2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.28</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1999 Equity Participation Plan, as amended (incorporated by reference to Appendix A to the Company&#146;s proxy statement</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">dated October 4, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.29</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form of Option Agreement under 1999 Equity Participation Plan (incorporated by reference to Exhibit 10.24 to</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amendment No. 2)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.30</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Executive Non-Qualified Excess Plan (incorporated by reference to Exhibit 10.1 to the Company&#146;s Current Report on</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form 8-K filed on August 14, 2002)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.31</FONT></TD>
     <TD  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Executive Non-Qualified Excess Plan Adoption Agreement (incorporated by reference to
Exhibit 10.2 </FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD  ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> to the Company&#146;s Current Report on Form 8-K filed on August 14, 2002)</FONT></TD></TR>


</TABLE>

         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp; 10.32</font> </font></P></TD>
<TD WIDTH=92%><P>
          <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;Sixth Amended and Restated  Promissory Note between Midland Credit  Management,  Inc. and Bank of America.dated as of
                  March 22, 2002 in the original  stated
              </font></P>
</TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> </font> </font></P></TD>
<TD WIDTH=92%><P>
          <FONT FACE="Times New Roman, Times, Serif" SIZE=2>  &nbsp;amount of $15,000,000 (incorporated  by  reference to Exhibit  10.37 to the Company&#146;s Annual Report on Form 10-K for the year ended  December 31, 2001 filed on March 27, 2002)</font></P>
</TD>
</TR>
</TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.33</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Limited Guaranty of the Company dated July 15, 1999 in favor of Bank of America, N.A. (incorporated by reference to</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exhibit 10.2 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended June 30, 1999 filed on August 23, 1999</FONT></TD></TR>

<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.34</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Acknowledgement dated March 22, 2002 of limited guaranty by Nelson Peltz, Peter May, Triarc Companies, the Company</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">and Chandler Family Partnership originally dated August 28, 1998 (incorporated by reference to Exhibit 10.38 to the</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2001 filed on March 27, 2002)</FONT></TD></TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>99</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.35</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Form of Directors Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Company&#146;s Amended</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Annual Report on Form 10-K/A for the year ended December 31, 1999 filed on May 1, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.36</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Asset Purchase Agreement, dated May 11, 2000, between Midland Acquisition Corporation and West Capital Financial</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Services Corp. (incorporated by reference to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed on June 6, 2000)</FONT></TD></TR>
</table>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.37</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Trust Receivables Purchase Agreement, dated May 22, 2000, by and among the Company, West Capital Financial Services</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corp., WCFSC Special Purpose Corporation, WCFSC Special Purpose Corporation II and Norwest Bank Minnesota, National</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Association, as Trustee for WCFSC Consumer Receivables Recovery Trust 1995-1 (incorporated by reference to Exhibit</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10.2 to the Company&#146;s Current Report on Form 8-K filed on June 6, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.38</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Guaranty, dated May 22, 2000, by the Company for the benefit of West Capital Financial Services Corp. (incorporated</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">by reference to Exhibit 10.4 to the Company&#146;s Current Report on Form 8-K filed on June 6, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.39</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Indenture and Servicing Agreement relating to Midland Receivables-Backed Notes, Series 1999-1 (incorporated by</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">reference to Exhibit 10.3 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended September 30, 2000</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">filed on November 14, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.40</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">First Amendment to Indenture and Servicing Agreement relating to Midland Receivables-Backed Notes, Series 1999-1</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(incorporated by reference to Exhibit 10.5 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">September 30, 2000 filed on November 14, 2000)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.41</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Second Amendment to Indenture and Servicing Agreement relating to Midland Receivables-Backed Notes, Series 1999-1</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(incorporated by reference to Exhibit 10.4 to the Company&#146;s Current Report on Form 8-K filed on November 12, 2002)</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.42</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Insurance and Reimbursement Agreement relating to Midland Receivables-Backed Notes, Series 1999-1 (incorporated by</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">reference to Exhibit 10.4 to the Company&#146;s Quarterly Report on Form 10-Q for the period ended September 30, 2000</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">filed on November 14, 2000)</FONT></TD></TR>
</TABLE>

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<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.43 </font></P></TD>
<TD WIDTH=92%><P>
           <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Letter dated September 19, 2002 relating to third party service agreement  (incorporated by reference to Exhibit 10.5
                 to the </font></P>
</TD>
</TR>
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<TD  ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> </font></P></TD>
<TD ><P>
           <FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Company&#146;s Current Report on Form 8-K filed on November 12, 2002)</font></P>
</TD>
</TR>
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     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.44</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Credit Agreement by and between MRC Receivables Corporation, as borrower and CFSC Capital Corp. VIII, as lender,</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">dated as of December 20, 2000 (incorporated by reference to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">filed on January 9, 2001)</FONT></TD></TR>
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<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;10.45 </font> </P></TD>
<TD WIDTH=92%><P>
         <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employment  Agreement  dated as of May 22,  2000  between  the  Company and Carl C.  Gregory,  III  (incorporated  by
                 reference to Exhibit 10.1 to </font></P>
</TD>
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<TD WIDTH=8% ALIGN=left><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp; </font> </P></TD>
<TD WIDTH=92%><P>
         <FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  the Company&#146;s Current Report on Form 8-K filed on March 25, 2002)</font></P>
</TD>
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</TABLE>


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     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;10.46</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Employment Agreement dated as of May 22, 2000 between the Company and J. Brandon Black (incorporated by reference to</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exhibit 10.2 to the Company&#146;s Current Report on Form 8-K filed on March 25, 2002)</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;21&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">List of Subsidiaries (incorporated by reference to Exhibit 21 to the Company&#146;s Annual Report on Form 10-K for the</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">year ended December 31, 2000 filed on March 30, 2001)</FONT></TD></TR>
</TABLE>


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     <TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;23.1</FONT></TD>
     <TD WIDTH="92%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Consent of Independent Auditors, BDO Seidman, LLP, dated March 25, 2003 to the incorporation by reference of their</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">report dated February 18, 2003, in the Company&#146;s Registration Statement on Form S-8. (filed herewith)</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;23.2</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Consent of Independent Auditors, Ernst &amp; Young LLP, dated March 25, 2003 to the incorporation by reference of their</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">report dated February 2, 2001, in the Company&#146;s Registration Statement on Form S-8. (filed herewith)</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;24&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Power of Attorney. (filed herewith)</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;99.1&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Certification  of the Chief Executive  Officer  pursuant to 18 U.S.C.  section 1350, as adopted pursuant to section 906 of the
              Sarbanes-Oxley Act of 2002.  (filed herewith)
</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;99.2&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Certification  of the Chief Financial  Officer  pursuant to 18 U.S.C.  section 1350, as adopted pursuant to section 906 of the
              Sarbanes-Oxley Act of 2002.  (filed herewith)
</FONT></TD></TR>

</TABLE>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>100</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<A HREF="#Index">Index</A>
<A NAME="Itemgg"></A>

                                                            <P ALIGN=CENTER> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>SIGNATURES</b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities  Exchange  Act of 1933,  the  registrant  has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.</font></P>

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     <TD WIDTH="54%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">ENCORE CAPITAL GROUP, INC.,</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">a Delaware corporation</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By:&nbsp;&nbsp;&nbsp;&nbsp;/s/ Carl C. Gregory, III</FONT><HR width=45% SIZE=1 NOSHADE></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carl C. Gregory, III</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">President and Chief Executive Officer</FONT></TD></TR>
</TABLE>


<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date:  March 28, 2003</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the  requirements of the Securities  Exchange Act of 1934,  this report has been signed by the following  persons on behalf
of the registrant and in the capacities and on the dates indicated.</font></P>

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     <TD WIDTH="30%" ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Carl C. Gregory, III</FONT><HR width=75% align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD WIDTH="30%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">President, Chief Executive Officer and</FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 25, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Carl C. Gregory, III</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp; &nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Principal Executive Officer)</FONT></TD></TR>
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     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Barry R. Barkley</FONT><HR  width=75%  align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Executive Vice President, Chief Financial</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 25, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Barry R. Barkley</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Officer and Treasurer</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Principal Financial and Accounting</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Officer)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
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     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Eric D. Kogan*</FONT><HR width=75% align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 25, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Eric D. Kogan</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT><HR width=75% align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March &nbsp;&nbsp;&nbsp;, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Peter W. May</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
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     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Richard Mandell*</FONT><HR width=75% align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Richard Mandell</FONT></TD>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Robert M. Whyte*</FONT><HR  width=75% align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 25, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Robert M. Whyte</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
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     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Ray Fleming*</FONT><HR width=75% align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 25, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ray Fleming</FONT></TD>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March &nbsp;&nbsp;&nbsp;, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nelson Peltz</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Alexander Lemond*</FONT><HR width=75% align=left  NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 25, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Alexander Lemond</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
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     <TD ><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Neville Joel Katz*</FONT><HR width=75% align=left NOSHADE COLOR="Black" SIZE="1"></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Director</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 25, 2003</FONT></TD></TR>

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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Neville Joel Katz</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;</FONT></TD>
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</center>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
/s/ Carl C. Gregory, III&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As attorney-in-fact pursuant to power of attorney dated on or about March 25, 2003</FONT></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>101</font></P>


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<A HREF="#Index">Index</A>
<A NAME="Itemhh"></A>


                                                       <P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER</b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Carl C. Gregory, III, President of Encore Capital Group, Inc. (the "Company"),
 certify that:</font></P>

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<TD WIDTH=10% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1</font>.   </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;    I have reviewed this annual report on Form 10-K of the Company;</font></P>
</TD>
</TR>
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<br>
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<TD WIDTH=5% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.</font>  </P></TD>
<TD WIDTH=95% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     Based on my  knowledge,  this  annual  report  does not contain  any untrue  statement  of a material  fact or omit to state a
         material fact necessary to make the statements  made, in light of the  circumstances  under which such  statements  were made,
         not misleading with respect to the period covered by this annual report;</font></P>
</TD>
</TR>
</TABLE>
<br>
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<TD WIDTH=5% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.</font> </P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       Based on my knowledge,  the financial  statements,  and other  financial  information  included in this annual report,  fairly
         present in all material  respects the financial  condition,  results of operations and cash flows of the registrant as of, and
         for, the periods presented in this annual report;</font></P>
</TD>
</TR>
</TABLE>
<br>

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<TD WIDTH=5% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.</font> </P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      The registrant's  other certifying  officers and I are responsible for  establishing and maintaining  disclosure  controls and
         procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:</font></P>
</TD>
</TR>
</TABLE>
<br>

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<TR VALIGN=TOP>
<TD WIDTH=7% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a.</font>  </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     designed such disclosure  controls and procedures to ensure that material  information  relating to the registrant,  including
              its consolidated  subsidiaries,  is made known to us by others within those entities,  particularly  during the period in
              which this annual report is being prepared;</font></P>
</TD>
</TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=7% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>b.</font>  </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       evaluated the  effectiveness of the registrant's  disclosure  controls and procedures as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and</font></P>
</TD>
</TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> c.</font> </P></TD>
<TD WIDTH=91%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         presented in this annual report our conclusions  about the  effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;</font></P>
</TD>
</TR>
</TABLE>
<br>

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<TD WIDTH=5% ALIGN=LEFT><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.</font></P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      The registrant's  other certifying  officers and I have disclosed,  based on our most recent  evaluation,  to the registrant's
         auditors and the audit committee of registrant's board of directors (or persons fulfilling the equivalent function):</font></P>
</TD>
</TR>
</TABLE>

<br>
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<TD WIDTH=7% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> a</font>. </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         all significant  deficiencies in the design or operation of internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report financial data and have identified for the  registrant's  auditors any
              material weaknesses in internal controls; and</font></P>
</TD>
</TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=9% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P>  <FONT FACE="Times New Roman, Times, Serif" SIZE=2>b.</font>  </P></TD>
<TD WIDTH=92%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         any  fraud,  whether  or not  material,  that  involves  management  or other  employees  who have a  significant  role in the
              registrant's internal controls; and</font></P>
</TD>
</TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.</font></P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       The  registrant's  other  certifying  officer and I have indicated in this annual report whether or not there were significant
         changes in internal controls or in other factors that could  significantly  affect internal controls subsequent to the date of
         our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.</font></P>
</TD>
</TR>
</TABLE>
<br>


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<TD WIDTH=25% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: March 28, 2003 </font></TD>
<TD WIDTH=35% ALIGN=RIGHT></TD>
<TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  <u> By: /s/ Carl C. Gregory, III&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font>
</TD></TR>
<TR VALIGN=TOP>
<TD WIDTH=25% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
<TD WIDTH=35% ALIGN=RIGHT></TD>
<TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    Carl C. Gregory, III</font>
</TD></TR>
<TR VALIGN=TOP>
<TD WIDTH=25% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font> </TD>
<TD WIDTH=35% ALIGN=RIGHT> </TD>
<TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>   Principal Executive Officer</font>
</TD>
</TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>102</font></P>


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<A HREF="#Index">Index</A>
<A NAME="Itemii"></A>

                                             <P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER</b></font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;I,  Barry R. Barkley, Principal Financial Officer of Encore Capital Group, Inc. (the "Company"),
 certify that:</font></P>

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<TD WIDTH=10% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1</font>.   </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;    I have reviewed this annual report on Form 10-K of the Company;</font></P>
</TD>
</TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.</font>  </P></TD>
<TD WIDTH=95% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     Based on my  knowledge,  this  annual  report  does not contain  any untrue  statement  of a material  fact or omit to state a
         material fact necessary to make the statements  made, in light of the  circumstances  under which such  statements  were made,
         not misleading with respect to the period covered by this annual report;</font></P>
</TD>
</TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.</font> </P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       Based on my knowledge,  the financial  statements,  and other  financial  information  included in this annual report,  fairly
         present in all material  respects the financial  condition,  results of operations and cash flows of the registrant as of, and
         for, the periods presented in this annual report;</font></P>
</TD>
</TR>
</TABLE>
<br>

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<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.</font> </P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      The registrant's  other certifying  officers and I are responsible for  establishing and maintaining  disclosure  controls and
         procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:</font></P>
</TD>
</TR>
</TABLE>
<br>

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<TR VALIGN=TOP>
<TD WIDTH=7% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a.</font>  </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     designed such disclosure  controls and procedures to ensure that material  information  relating to the registrant,  including
              its consolidated  subsidiaries,  is made known to us by others within those entities,  particularly  during the period in
              which this annual report is being prepared;</font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=7% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>b.</font>  </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       evaluated the  effectiveness of the registrant's  disclosure  controls and procedures as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and</font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=8% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> c.</font> </P></TD>
<TD WIDTH=91%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         presented in this annual report our conclusions  about the  effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;</font></P>
</TD>
</TR>
</TABLE>
<br>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.</font></P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>      The registrant's  other certifying  officers and I have disclosed,  based on our most recent  evaluation,  to the registrant's
         auditors and the audit committee of registrant's board of directors (or persons fulfilling the equivalent function):</font></P>
</TD>
</TR>
</TABLE>

<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=7% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> a</font>. </P></TD>
<TD WIDTH=90%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         all significant  deficiencies in the design or operation of internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report financial data and have identified for the  registrant's  auditors any
              material weaknesses in internal controls; and</font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=3% ALIGN=LEFT><P>  <FONT FACE="Times New Roman, Times, Serif" SIZE=2>b.</font>  </P></TD>
<TD WIDTH=92%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         any  fraud,  whether  or not  material,  that  involves  management  or other  employees  who have a  significant  role in the
              registrant's internal controls; and</font></P>
</TD>
</TR>
</TABLE>
<br>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.</font></P></TD>
<TD WIDTH=95%><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>       The  registrant's  other  certifying  officer and I have indicated in this annual report whether or not there were significant
         changes in internal controls or in other factors that could  significantly  affect internal controls subsequent to the date of
         our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.</font></P>
</TD>
</TR>
</TABLE>
<br>


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<TD WIDTH=25% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: March 28, 2003 </font> </P></TD>
<TD WIDTH=35% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=50% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    <u>By: /s/ Barry R. Barkley&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></P>
</TD></TR>
<TR VALIGN=TOP>
<TD WIDTH=25% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font> </P></TD>
<TD WIDTH=35% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=50% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     Barry R. Barkley</font></P>
</TD></TR>
<TR VALIGN=TOP>
<TD WIDTH=25% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font> </P></TD>
<TD WIDTH=35% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=50% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>   Principal Financial Officer</font></P>
</TD>
</TR>
</TABLE>
<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>103</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>





<A HREF="#Index">Index</A>
<A NAME="Itemjj"></A>


                                                            <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>EXHIBIT 23.1</b></font></H1>



                                                   <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>CONSENT OF INDEPENDENT AUDITORS</b></font></H1>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the
incorporation by reference in the Registration Statement on Form S-8 (No.
333-36182), pertaining to the Encore Capital Group, Inc. 1999 Equity
Participation Plan, of our report dated February 18, 2003 with respect to the
consolidated financial statements of Encore Capital Group, Inc, included in its
Annual Report on Form 10-K as of and for the year ended December 31, 2002. </FONT></P>

     <P ALIGN=RIGHT> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ BDO Seidman, LLP</font></P>





<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Costa Mesa, California</font></P>

<P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 25, 2003
</font></P>


<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>104</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>



 <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>EXHIBIT 23.2</b></font></H1>



                                                   <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>CONSENT OF INDEPENDENT AUDITORS</b></font></H1>








<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
We
consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-36182) pertaining to the Encore Capital Group, Inc. 1999 Equity
Participation Plan of our report dated February 2, 2001 with respect to the
consolidated financial statements of Encore Capital Group, Inc. for the year
ended December 31, 2000 included in the Annual Report (Form 10-K) for the year
ended December 31, 2002.</FONT></P>
<BR>

                         <P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  /s/ Ernst &amp; Young LLP</font></P>



     <P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kansas City, Missouri</font></P>

     <P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 25, 2003</font></P>



<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>105</font></P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

 <H1 align=center> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>  Exhibit 24</b></font></H1>




              <H1 align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>POWER OF ATTORNEY</b></font></H1>



            <P>    <FONT FACE="Times New Roman, Times, Serif" SIZE=2>KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below  constitutes and appoints CARL C. GREGORY,
III and BARRY R. BARKLEY,  and each of them, his true and lawful  attorneys-in-fact  and agents,  with full power of  substitution  and
resubstitution  for him in his name, place and stead, in any and all capacities,  to sign the Annual Report on Form 10-K for the fiscal
year ended December 31, 2002, and any and all amendments  thereto,  and to file the same, with all exhibits thereto and other documents
in connection  therewith,  with the Securities and Exchange Commission,  granting unto said  attorneys-in-fact  and agents, and each of
them,  full power and  authority to do and perform  each and every act and thing  requisite  and  necessary to be done in and about the
premises as fully and to all intents and  purposes as he might or could do in person  hereby  ratifying  and  confirming  all that said
attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.</font></P>

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     <TD WIDTH="35%" ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 25, 2003</font></TD>
     <TD WIDTH="7%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="7%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="51%" ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Eric D. Kogan</font><HR width=55% align=left NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="top">
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Eric D. Kogan</font></TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March &nbsp;&nbsp;&nbsp;&nbsp;, 2003</font></TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
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     <TD ALIGN="LEFT">&nbsp;<HR width=55% align=left NOSHADE COLOR="Black" SIZE="1"></TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Peter W. May</font></TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 25, 2003</font></TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Richard A. Mandell</font>
<HR width=55% align=left NOSHADE COLOR="Black" SIZE="1"></TD></TR>
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     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Richard A. Mandell</font></TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 25, 2003</font></TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Robert M. Whyte</font><HR width=55% align=left NOSHADE COLOR="Black" SIZE="1"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font> </TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Robert M. Whyte</font> </TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 25, 2003</font></TD>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Raymond Fleming</font>
<HR width=55% align=left NOSHADE COLOR="Black" SIZE="1"></TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Raymond Fleming</font></TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>March &nbsp;&nbsp;&nbsp;&nbsp;, 2003</font></font></TD>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Alexander Lemond</font>
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     <TD ALIGN="LEFT">  <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Alexander Lemond</font></TD></TR>
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     <TD ALIGN="LEFT"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Neville Joel Katz</font>
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     <TD ALIGN="LEFT">  <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Neville Joel Katz</font></TD></TR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>106
</font></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 99.1</font></P>


                                                     <H1 ALIGN=CENTER> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>ENCORE CAPITAL GROUP, INC.</font></H1>


                                                      <H1 ALIGN=CENTER> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATION PURSUANT TO<br>
                                                        18 U.S.C. SECTION 1350,<br>
                                                        AS ADOPTED PURSUANT TO<br>
                                             SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</font></h1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
Annual Report of Encore Capital Group, Inc. (the &quot;Company&quot;) on
Form&#160;10-K for the year ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the &quot;Report&quot;), the
undersigned certifies, pursuant to 18 U.S.C. Section&#160;1350, as adopted
pursuant to Section&#160;906 of the Sarbanes-Oxley Act of 2002, that to the best
of his knowledge: </FONT></P>


 <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) </font> </P></TD>
<TD WIDTH=95%><P>
     <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
                  and</font></P>
</TD>
</TR>
</TABLE>

        <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) </font></P></TD>
<TD WIDTH=95%><P>
      <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;The information contained in the Report fairly presents, in all material respects, the financial condition and
                  results of operations of the Company.</font></P>
</TD>
</TR>
</TABLE>



<P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp;&nbsp;/s/ Carl C. Gregory, III&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>

Carl C. Gregory, III<br>
<i>Chief Executive Officer</i><br>
March 28, 2003</font></P>

         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=80%><P>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
signed original of this written statement required by Section 906 has been
provided to Encore Capital Group, Inc. and will be retained by Encore Capital
Group, Inc. and furnished to the Securities and Exchange Commission or its staff
upon request.</font></P>
</TD><TD WIDTH=10% ALIGN=RIGHT><P> </P></TD>
</TR>
</TABLE>

<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>107</font></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 99.2</font></P>

                                                     <H1 ALIGN=CENTER> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>ENCORE CAPITAL GROUP, INC.</font></H1>


                                                       <H1 ALIGN=CENTER> <FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATION PURSUANT TO<br>
                                                        18 U.S.C. SECTION 1350,<br>
                                                        AS ADOPTED PURSUANT TO<br>
                                             SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</font></h1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection  with the Annual Report of Encore Capital Group,  Inc. (the  "Company") on Form 10-K for the year ended December 31, 2002
as filed with the Securities and Exchange  Commission on the date hereof (the  "Report"),  the  undersigned  certifies,  pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:</font></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=lefT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) </font></P></TD>
<TD WIDTH=95%><P>
      <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
                  and</font></P>
</TD>
</TR>
</TABLE>

         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=lefT><P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</font>  </P></TD>
<TD WIDTH=95%><P>
     <FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;The information contained in the Report fairly presents, in all material respects, the financial condition and
                  results of operations of the Company.</font></P>
</TD>
</TR>
</TABLE>

  <P> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>&nbsp;&nbsp;&nbsp;&nbsp;/s/ Barry R. Barkley&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><br>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>Barry R. Barkley</font><br>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>Chief Financial Officer</i></font><br>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 28, 2003</font></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=80%><P>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
signed original of this written statement required by Section 906 has been
provided to Encore Capital Group, Inc. and will be retained by Encore Capital
Group, Inc. and furnished to the Securities and Exchange Commission or its staff
upon request.</font></P>
</TD><TD WIDTH=10% ALIGN=RIGHT><P> </P></TD>
</TR>
</TABLE>
<br><br><br>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>108</font></P>


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