What changed in this filing

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Item 1A. Risk Factors

2026-05-07 compared with 2025-11-10 · 45 added, 21 removed, 470 unchanged (12% of the section changed)

37 unchanged sentences

The recent growth of our investments in private label credit and general purpose credit card receivables may not be indicative of our ability to grow such receivables in the future.

Our period-end managed receivables balance for private label credit and general purpose credit card receivables grew to $6,600.1 million at September 30, 2025, from $2,653.8 million at September 30, 2024.

Our period-end managed receivables balance for private label credit and general purpose credit card receivables grew to $6,724.9 million at March 31, 2026, from $2,706.3 million at March 31, 2025.

Mercury accounted for 3,078.7 of the current quarter's receivable.

The amount of such receivables has fluctuated significantly over the course of our operating history.

2 unchanged sentences

Reliance upon relationships with a few large retailers in the private label credit operations may adversely affect our revenues and operating results from these operations.

Our five largest retail partners accounted for over 85% of our outstanding private label credit receivables as of September 30, 2025.

Our five largest retail partners accounted for 84% of our outstanding private label credit receivables as of March 31, 2026.

Although we are adding new retail partners on a regular basis, it is likely that we will continue to derive a significant portion of this operations’ receivables base and corresponding revenue from a relatively small number of partners in the future.

1 unchanged sentence

We Operate in a Heavily Regulated Industry

Changes in bankruptcy, privacy or other consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect receivables, or otherwise adversely affect our operations.

Changes in bankruptcy, privacy or other federal or state consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect receivables, or otherwise adversely affect our operations.

Similarly, regulatory changes could adversely affect the ability or willingness of lenders who utilize our technology platform and related services to market credit products and services to consumers.

39 unchanged sentences

While our practices are in compliance with these changes, some of the changes (e.g., limitations on the ability to assess up-front fees) have significantly affected the viability of certain credit products within the U.S.

In addition, the current regulatory environment could be impacted by future legislative developments that significantly impact financial services companies like ours.

For example, in February and March 2025, bipartisan legislation was introduced in both the United States Senate and House, respectively, seeking to amend the Truth in Lending Act (“TILA”) to cap credit card interest rates at 10% effective January 1, 2031.

Thereafter, in January 2026, the current presidential administration proposed a 10% cap on credit card interest rates for one year.

Additional bills have been introduced in Congress in 2026 that seek to cap interest rates in other ways, such as US S3721, which would amend TILA to cap interest rates on all consumer credit products at the maximum amount permitted in the state where the customer resides, and US S3793, which would extend the Military Lending Act’s 36% military annual percentage rate cap and related protections to all consumers in connection with all consumer credit products subject to only limited exceptions for residential mortgages, certain secured auto loans, and federal credit unions.

Any temporary or permanent implementation of a specific interest rate cap on consumer credit cards or more broadly across all consumer credit products could have a material adverse effect on our business and operations.

New laws and regulations such as these could significantly lower or eliminate the profitability of operations going forward by, among other things, reducing the amount of interest and fees we charge in connection with any financial products that are offered or otherwise available to consumers.

Changes in the consumer protection laws could result in the following:

37 unchanged sentences

These include the risks that we will not be able to integrate and operate successfully new businesses, that we will have to incur substantial indebtedness and increase our leverage in order to pay for the acquisitions, that we will be exposed to, and have to comply with, different regulatory regimes and that we will not be able to apply our traditional analytical framework (which is what we expect to be able to do) in a successful and value-enhancing manner.

Failure to realize the expected benefits of our acquisition of Mercury Financial LLC could adversely affect our business and the value of our securities.

Failure to realize the expected benefits of our acquisition of Mercury could adversely affect our business and the value of our securities.

Although we expect significant benefits to result from the acquisition of Mercury, we may not actually realize any of them or realize them within the anticipated timeframe.

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coordinating marketing efforts to effectively position our capabilities;

• coordinating and integrating operations;

coordinating and integrating operations; and

integrating employees and related human resource systems and benefits, maintaining employee morale and retaining key employees.

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Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 and concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness described under Part II, Item 9A “Controls and Procedures” on our Form 10-K for the fiscal year ended December 31, 2024.

Based on the successful monitoring of these remediation efforts, the Company concluded that the material weakness identified above has been remediated as of the date of this report.

Based on the successful monitoring of these remediation efforts, the Company concluded that the material weakness identified above was remediated, as disclosed in the September 30, 2025 Form 10-Q.

Remediation efforts place a significant burden on management and add increased pressure on our financial resources and processes.

1 unchanged sentence

Such harm may include:

(i) failure to accurately report our financial results, to prevent fraud or to meet our SEC reporting obligations in a timely basis or at all; (ii) material misstatements in our condensed consolidated financial statements and harm to our operating results and investor confidence; and (iii) a material adverse effect on the trading prices of our securities.

(i) failure to accurately report our financial results, to prevent fraud or to meet our SEC reporting obligations in a timely basis or at all; (ii) material misstatements in our consolidated financial statements and harm to our operating results and investor confidence; and (iii) a material adverse effect on the trading prices of our securities.

In addition, the foregoing could subject us to sanctions or investigations by the NASDAQ, the SEC or other regulatory authorities, and result in the breach of covenants in our debt agreements, any of which could have a material adverse impact on our operations, financial condition, results of operations, liquidity and our securities’ trading prices.

29 unchanged sentences

Our existing and future levels of indebtedness could adversely affect our financial health, our ability to obtain financing in the future, our ability to react to changes in our business and our ability to fulfill our obligations under the existing indebtedness.

As of September 30, 2025, we had $882.4 million of recourse indebtedness outstanding and $5,194.7 million of indebtedness outstanding under warehouse facilities and asset backed securities, all of which is non-recourse indebtedness.

As of December 31, 2025, we had $934.9 million of recourse indebtedness outstanding and $5,629.6 million of indebtedness outstanding under warehouse facilities and asset backed securities, all of which is non-recourse indebtedness.

Our level of indebtedness could:

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restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us, which could limit our ability to, among other things, make required payments on our debt;

increase our vulnerability to general adverse economic and industry conditions;

increase our vulnerability to general adverse economic and industry conditions; and

place us at a competitive disadvantage compared to other companies with proportionately less debt or comparable debt at more favorable interest rates who, as a result, may be better positioned to withstand economic downturns.

2 unchanged sentences

Our financial performance and consumers’ ability to repay indebtedness may be affected by uncertain economic conditions, including inflation, government shutdowns and changing interest rates.

In recent months, there have been significant changes to U.S.

trade policies, treaties and tariffs.

Although trade negotiations are ongoing, sustained higher tariffs might accelerate inflation.

Higher inflation increases the costs of goods and services, reduces consumer spending power and may negatively affect our ability to purchase receivables.

26 unchanged sentences

Any such failure to adapt to changes could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows.

Recently, the financial services industry has experienced rapid developments in artificial intelligence, including agentic artificial intelligence.

The use of artificial intelligence models developed by third parties introduces risks related to how those models are developed, trained, and deployed, including unauthorized material in training data and limited visibility into risk mitigation steps.

The legal and regulatory environment for artificial intelligence is uncertain and rapidly evolving, potentially increasing compliance costs and risks of noncompliance.

We may be exposed to the risk that generative artificial intelligence models may produce incorrect outputs, release confidential information, reflect biases, or otherwise cause harm.

Their complexity may make it challenging to understand all outputs and comply with documentation or explanation requirements.

Any of these risks could adversely affect our business, expose us to liability or other adverse legal or regulatory consequences, or otherwise adversely affect our financial results.

If we are unable to protect our information systems against service interruption, our operations could be disrupted and our reputation may be damaged.

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Also, a party that is able to circumvent our security measures could misappropriate proprietary information, cause interruption in our operations, damage our computers or those of our users, or otherwise damage our reputation and business.

We use models in our business, and we could be adversely affected if our design, implementation, or use of models is flawed.

The use of statistical and quantitative models and other quantitatively based analyses is central to our operations.

We use quantitative models to price products and services, measure risk, calculate the quantitative portion of our allowance for loan losses, assess liquidity, create financial forecasts, and otherwise conduct our business and operations.

We anticipate that model-derived insights will penetrate further into our decision-making processes, and particularly our risk management efforts.

While these quantitative techniques and approaches improve our decision-making, they also create the possibility that faulty data or flawed quantitative approaches could yield adverse outcomes or regulatory scrutiny.

Additionally, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making.

Some models we use employ methodologies based on artificial intelligence or machine learning.

These models may have unique complexities when compared to more traditional models, such as the need for large and representative datasets for training, the increased potential for bias, and the difficulty in interpreting model decisions and implementing model adjustments.

We also rely on model inputs that are provided by third parties.

To the extent that any flawed models or inaccurate model outputs are used in reports to regulatory agencies or the public, we could be subjected to supervisory actions, private litigation, and other proceedings that may adversely affect our business, financial condition, and results of operations.

If our models fail to produce reliable results on an ongoing basis, we may not make appropriate risk management, capital planning or other business or financial decisions.

Regulation in the areas of privacy and data security could increase our costs.

11 unchanged sentences

We anticipate that the CPRA and certain regulations promulgated by the California Privacy Protection Agency will apply to our business and we will work to ensure compliance with such laws and regulations by their effective dates.

Other states, including but not limited to Texas, Colorado, Connecticut, Oregon, Montana, Utah and Virginia, have adopted privacy laws with similarities to the CCPA, all of which are expected to be implemented by the end of 2026.

There is an increasing focus by legislators, courts and regulators regarding the collection, use and sharing of data by websites, including the CCPA.

Recent and evolving interpretations of existing state laws, including existing wiretapping laws such as the California Invasion of Privacy Act, have expanded to include the use of cookies, pixels and third-party ad-tracking technologies, and which may carry statutory penalties.

This may result in potential exposure relating to our use of technology and our implementation of related safeguards.

Compliance with these laws regarding the protection of consumer and employee data could result in higher compliance and technology costs for us, as well as potentially significant fines and penalties for noncompliance.

1 unchanged sentence

The interpretation of many of these statutes and regulations is evolving in the courts and administrative agencies and an inability to comply with them may have an adverse impact on our business.

In addition to the foregoing enhanced data security requirements, various federal banking regulatory agencies, and all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands, have enacted data security regulations and laws requiring varying levels of consumer notification in the event of a security breach.

In addition to the foregoing enhanced privacy and data security requirements, various federal banking regulatory agencies, and all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands, have enacted privacy and data security regulations and laws requiring varying levels of consumer notification in the event of a security breach.

Also, federal legislators and regulators are increasingly pursuing new guidelines, laws and regulations that, if adopted, could further restrict how we collect, use, share and secure consumer information, possibly impacting some of our current or planned business initiatives.

12 unchanged sentences

The most direct impact is likely to be an increase in energy costs, adversely impacting consumers and their ability to incur and repay indebtedness.

We elected the fair value option for newly originated assets, effective as of January 1, 2020, and for all remaining assets associated with our private label credit and general purpose credit card platform as of January 1, 2022.

We use estimates in determining the fair value of our loans.

35 unchanged sentences

additions or departures of key personnel;

the annual yield from distributions on the Series B preferred stock or interest on the 2026 Senior Notes and the 2029 Senior Notes as compared to yields on other financial instruments; and

global pandemics (such as the COVID-19 pandemic).

the annual yield from distributions on the Series B preferred stock or interest on the 2026 Senior Notes and the 2029 Senior Notes as compared to yields on other financial instruments; an

government reactions to epidemics and global pandemics (such as the COVID-19 pandemic).

In addition, the stock markets from time to time experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operating performance of companies.

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The rights of holders of the Series B preferred stock to participate in the distribution of our assets will rank junior to the prior claims of our current and future creditors, the Series A preferred stock and any future series or class of preferred stock we may issue that ranks senior to the Series B preferred stock.

Our Articles of Incorporation authorize us to issue up to 10,000,000 shares of preferred stock in one or more series on terms determined by our board of directors, and as of September 30, 2025, we had outstanding 400,000 shares of Series A preferred stock and 3,563,762 shares of Series B preferred stock.

As of September 30, 2025, we could issue up to 6,036,238 additional shares of preferred stock.

Our Articles of Incorporation authorize us to issue up to 10,000,000 shares of preferred stock in one or more series on terms determined by our board of directors, and as of March 31, 2026, we had outstanding 400,000 shares of Series A preferred stock and 3,584,646 shares of Series B preferred stock.

As of March 31, 2026, we could issue up to 6,015,354 additional shares of preferred stock.

In addition, the Series B preferred stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries.

12 unchanged sentences

We are allowed to issue additional shares of Series B preferred stock and additional series of preferred stock that would rank on a parity with the Series B preferred stock as to dividend payments and rights upon our liquidation, dissolution or winding up of our affairs pursuant to our Articles of Incorporation and the Amended and Restated Articles of Amendment Establishing the Series B preferred stock without any vote of the holders of the Series B preferred stock.

As of September 30, 2025, we could issue up to 6,036,238 additional shares of preferred stock.

As of March 31, 2026, we could issue up to 6,015,354 additional shares of preferred stock.

The issuance of additional shares of Series B preferred stock and additional series of parity preferred stock could have the effect of reducing the amounts available to the holders of Series B preferred stock upon our liquidation or dissolution or the winding up of our affairs.

87 unchanged sentences

transfer or sell assets;

merge or consolidate;

merge or consolidate; and

enter into transactions with our affiliates.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors