What changed in this filing

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Item 1A. Risk Factors

2024-03-15 compared with 2023-03-15 · 117 added, 121 removed, 596 unchanged (29% of the section changed)

Our business, operating results

and financial condition could be adversely affected by any of the following specific risks.

The trading price of our common stock could

decline due to any of these risks and other industry risks.

This listing of risks by its nature cannot be exhaustive, and the order in

which the risks appear is not intended as an indication of their relative weight or importance.

In addition to the risks described below,

we may encounter risks that we do not currently recognize or that we currently deem immaterial, which may also impair our business operations

and the value of our common stock.

We are subject to various risks that may materially harm our business,

prospects, financial condition and results of operations.

An investment in our common stock is speculative and involves risk.

In evaluating

an investment in shares of our common stock, you should carefully consider the risks described below, together with the other information

included in this Annual Report on Form 10-K.

The risks described below are not the only risks we face.

of the events described in the following risk factors actually occurs, or if additional risks and uncertainties later materialize that

are not presently known to us or that we currently deem immaterial, then our business, prospects, results of operations and financial

condition could be materially adversely affected.

In that event, the trading price of our common stock could decline, and you may lose

all or part of your investment in our shares.

The risks discussed below include forward-looking statements, and our actual results may

differ substantially from those discussed in these forward-looking statements.

See “ Cautionary Note Regarding Forward-Looking Statements .”

Risks Related to Our Business

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While our access to such funding has improved since then, our results of operations, financial condition and cash flows

have been from time to time in the past and may be in the future materially and adversely affected.

have been from time to time in the past and may in the future be materially and adversely affected.

We require a substantial amount of

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Our expectation of profitability is a forward-looking

We discuss the assumptions underlying that expectation under the caption “Forward-Looking Statements” in this report.

We identify important factors that could cause actual results to differ, generally in the “Risk Factors” section of this report,

and also under the caption “Forward-Looking Statements.” One reason for our expectation is that we have had positive net income

in each of the eleven fiscal years ended December 31, 2022, although not in every quarter within that period.

We discuss the assumptions underlying that expectation under the caption “Cautionary Note Regarding Forward-Looking Statements”

in this report.

We identify important factors that could cause actual results to differ, generally in the “Risk Factors” section

of this report, and also under the caption “Cautionary Note Regarding Forward-Looking Statements.” One reason for our expectation

is that we have had positive net income in each of the twelve fiscal years ended December 31, 2023, although not in every quarter within

Our Results of Operations Will Depend on Our Ability

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advances may be made, but prior to which outstanding advances are due and payable.

See “Management’s Discussion and Analysis

of Financial Condition and Results of Operations – Liquidity and Capital Resources – Liquidity”.

See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Liquidity”.

Our access to financing sources

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If the operations of the wholesale

auction markets are disrupted, as they were during the recent COVID 19 pandemic, we may be unable to sell our used vehicles at sufficient

volume and/or pricing.

auction markets are disrupted, we may be unable to sell our used vehicles at sufficient volume and/or pricing.

The number of delinquencies,

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such as terrorist events, civil unrest, cyber-attacks, public health emergencies, extreme weather conditions or significant changes in

the geopolitical environment (such as the ongoing military conflict between Ukraine and Russia) and/or public policy, including increased

state, local or federal taxation, could adversely affect the ability and willingness of obligors to meet their payment obligations under

the receivables we originate.

Our operating results could be adversely affected if obligors are unable to make timely payments on their

receivables or if we elect to, or are required to, implement forbearance programs in connection with obligors suffering a hardship (including

hardships related to the COVID-19 pandemic and general economic conditions).

the geopolitical environment (such as the ongoing military conflict between Ukraine and Russia and the conflict in Israel) and/or public

policy, including increased state, local or federal taxation, could adversely affect the ability and willingness of obligors to meet their

payment obligations under the receivables we originate.

Our operating results could be adversely affected if obligors are unable to make

timely payments on their receivables.

The above described negative

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The Federal Reserve

increased interest rates multiple times in 2022, once in early 2023, and is expected to continue to raise rates further in 2023.

rates on risk-free debt continue to increase, or if our spread above risk-free rates should increase, or both, we would expect increased

interest expense, If interest rates in general should rise, our expenses would likewise rise, to have a material adverse effect on our

financial position, liquidity, results of operation and our ability to enter into future financing transactions.

increased interest rates multiple times in 2022 and 2023.

As a result, we have experienced increased interest expense in 2023.

rates on risk-free debt continue to increase, or if our spread above risk-free rates continue to increase, or both, we would expect a

continued increase in interest expense.

If interest rates in general should continue to rise, our expenses would likewise continue rise,

which could have a material adverse effect on our financial position, liquidity, results of operation and our ability to enter into future

financing transactions.

If We Are Unable to Compete Successfully with our Competitors,

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investigated by regulators and offices of state attorneys general, which could lead to enforcement actions, fines and penalties, or the

assertion of private claims and law suits against us.

The CFPB and the Federal Trade Commission (“FTC”) have the authority

to investigate consumer complaints against us, to conduct inquiries at their own instance, and to recommend enforcement actions and seek

monetary penalties.

The FTC conducted and concluded an inquiry into our practices, and proposed remedial action against us in 2014, to

which we consented.

The CFPB has adopted regulations that place us and other companies similar to us under its supervision.

state and local governmental agencies have jurisdiction over material portions of our business, and might take action adverse to us.

assurance can be given as to whether any of such hypothetical proceedings might materially and adversely affect us.

assertion of private claims and lawsuits against us.

The Consumer Financial Protection Bureau (“CFPB”) and the Federal Trade

Commission (“FTC”) have the authority to investigate consumer complaints against us, to conduct inquiries at their own instance,

and to recommend enforcement actions and seek monetary penalties.

The FTC has conducted and concluded an inquiry into our practices, and

proposed remedial action against us in 2014, to which we consented.

The CFPB has adopted regulations that place us and other companies

similar to us under its supervision.

A host of state and local governmental agencies have jurisdiction over material portions of our business,

and might take action adverse to us.

No assurance can be given as to whether any of such hypothetical proceedings might materially and

adversely affect us.

If we fail to comply with

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In addition to direct costs,

such compliance requires changes in forms, processes, procedures, controls and in the infrastructure to support these requirements.

may create operational constraints and place limits on pricing.

Laws in the financial services industry are designed primarily for the

protection of consumers.

such compliance requires forms, processes, procedures, controls and in the infrastructure to support these requirements.

Compliance may

create operational constraints and place limits on pricing.

Laws in the financial services industry are designed primarily for the protection

of consumers.

The failure to comply could result in significant statutory civil and criminal penalties, monetary damages, attorneys’

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The rule also sets forth prohibitions on transferring or hedging the credit risk that the sponsor is required to retain.

the rules place an upper limit on the degree to which we may use financial leverage, our securitization structures may require more capital

of us, or may release less cash to us, than might be the case in the absence of such rules.

but not identical risk retention requirements are applicable after December 2018 to securitization transactions where purchasers of the

ABS have sufficient contacts with the European Union.

Because the rules place an upper limit on the degree to which we may use financial

leverage, our securitization structures may require more capital of us, or may release less cash to us, than might be the case in the

absence of such rules.

If We Experience Unfavorable Litigation Results, Our Results of

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Negative publicity about our alleged or actual practices or about our industry generally

could adversely affect our stock price and our ability to retain and attract employees.

could adversely affect our stock price and our ability to retain and attract employees, which could in turn negatively affect our results

of operations or cashflows.

If We Experience Problems with Our Originations, Accounting or

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A Breach in the Security of Our Systems Could Result in the Disclosure

of confidential information or subject us to liability

of Confidential Information, Subject us to Liability.

We hold in our systems confidential

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These risks may increase in

the future as we continue to increase our mobile-payment and other internet-based product offerings and expands our use of web-based products

and applications.

the future as we continue to increase our mobile-payment and other internet-based product offerings and expands our use of web or cloud-based

products and applications.

A successful penetration of

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acquired since January 1, 2018 are accounted for based on the fair value method of accounting.

The risks described below are risks related

to fair value accounting.

If Actual Results for Our Receivables Materially Deviate from

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reduce our income and book value.

We May Have Rescission

Liability in Connection With Sales of Our Subordinated Renewable Notes to Certain Purchasers.

We filed a registration

statement on Form S-3 with respect to various securities, including our renewable unsecured subordinated notes, on May 28, 2015, and filed

amendments to the registration statement on June 26, 2015, and July 27, 2015 (such registration statement, as so amended, the “Former

Registration Statement”).

The Former Registration Statement was declared effective on August 26, 2015 (the “Former Registration

Statement Effective Date”).

Rule 415(a)(5) under the Securities Act of 1933, as amended (the “Securities Act”), provides

that a shelf registration statement such as the Former Registration Statement expires three years after the official effective date.

Former Registration Statement expired on August 26, 2018;

however, the Company continued to conduct offers and sales and renewals after

Additionally, with respect to the Former Registration Statement, the Company failed to file certain prospectus supplements

relating to certain sales.

Lastly, offers and sales of Renewable Notes and renewals of outstanding notes were made for amounts beyond

the amount of securities covered by the registration statement.

These activities may result in certain of these purchasers having a statutory

right to rescind their purchases.

As a result, we could be required to repurchase some or all of such notes at the original sale price

plus statutory interest, less the amount of any income received by the purchasers.

As of March 1, 2024, there were approximately $3 million

of such notes outstanding and sold within the preceding twelve months.

That figure includes renewals of previously sold notes, but excludes

notes that we have repaid, and excludes notes that we sold or renewed pursuant to the registration statement filed in on June 15, 2023,

subsequently amended on August 7, 2023 and November 20, 2023, and declared effective on November 30, 2023.

Our results of operations,

financial condition and cash flows could be materially and adversely affected if a substantial number of purchasers of such notes were

to successfully assert rescission rights or if we were to be assessed substantial penalties by regulatory authorities.

If holders of sufficient

amounts of such notes were to demand rescission and to prevail in that demand, the adverse effect on our liquidity could be material,

which could in turn impair our ability to conduct our business as otherwise planned.

Risks Related to General Factors

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customers, the actual rates of delinquencies, repossessions and losses on our automobile contracts could be higher under adverse economic

conditions than those experienced in the automobile finance industry in general, particularly in the states of California, Ohio, Texas,

and Florida, states in which our automobile contracts are geographically concentrated.

Any sustained period of economic slowdown or recession

could adversely affect our ability to acquire suitable automobile contracts, or to securitize pools of such automobile contracts.

timing of any economic changes is uncertain, and weakness in the economy could have an adverse effect on our business and that of the

dealers from which we purchase automobile contracts and result in reductions in our revenues or the cash flows available to us.

The Coronavirus Outbreak Could Have Adverse Effects

The COVID-19 virus has spread (“the pandemic”)

throughout the world.

The pandemic has had adverse effects on the economy of the United States (notably a significant decrease in employment)

and the global economy in general.

The long-term effects of the social, economic and financial disruptions caused by the pandemic are

The extent to which obligors on our automobile contracts may be adversely affected by the pandemic (including a resurgence due

to variants of COVID-19), by loss of employment, and by related efforts of governments to slow the spread of the COVID-19 virus throughout

the nation and world cannot be predicted.

These occurrences could have a material adverse effect on the ability of obligors to make timely

payments to us.

conditions than those experienced in the automobile finance industry in general, particularly in the states of California, Texas, Ohio,

Illinois and Florida, states in which our automobile contracts are geographically concentrated.

Any sustained period of economic slowdown

or recession could adversely affect our ability to acquire suitable automobile contracts, or to securitize pools of such automobile contracts.

The timing of any economic changes is uncertain, and weakness in the economy could have an adverse effect on our business and that of

the dealers from which we purchase automobile contracts and result in reductions in our revenues or the cash flows available to us.

A Pandemic or Other Public Health Emergency Could Have Adverse Effects

The extent to which obligors on our automobile

contracts may be adversely affected by a pandemic or other public health emergency, by loss of employment, and by related efforts of governments

to slow the spread of a disease outbreak throughout the nation and world cannot be predicted.

These occurrences could have a material

adverse effect on the ability of obligors to make timely payments to us.

Finally, and depending on the extent to which

the pandemic adversely affects the United States economy, it may also have the effect of heightening many of the other risks described

in this “Risk Factors” section, such as those related to our business or operations, the ability or willingness of our customers

to make timely payments, and risks of geographic concentrations.

a pandemic or other public health emergency adversely affects the United States economy, it may also have the effect of heightening many

of the other risks described in this “Risk Factors” section, such as those related to our business or operations, the ability

or willingness of our customers to make timely payments, and risks of geographic concentrations.

Our Results of Operations May Be Impaired as a Result of Natural

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Other economic factors include interest rates, general unemployment levels, the rate of inflation, adjustments in

monthly mortgage payments and consumer perceptions of economic conditions generally and the effect of government stimulus programs and

consumer protection/payment relief efforts implemented in connection with the COVID-19 virus.

Social factors include changes in consumer

confidence levels, consumer attitudes toward bankruptcy and the repayment of indebtedness and consumer perceptions of political events

and shifts, which may be affected by the pandemic.

We are generally unable to determine whether or to what extent economic or social factors

will affect the performance of our portfolio of automobile contracts, but caution that a recession or depression in local, regional or

national economies would be expected to increase delinquencies and losses, which would adversely affect our financial condition and results

of operations.

monthly mortgage payments and consumer perceptions of economic conditions generally and the effect of any government stimulus programs

and consumer protection/payment relief efforts.

Social factors include changes in consumer confidence levels, consumer attitudes toward

bankruptcy and the repayment of indebtedness and consumer perceptions of political events and shifts, which may be affected by the pandemic.

We are generally unable to determine whether or to what extent economic or social factors will affect the performance of our portfolio

of automobile contracts, but caution that a recession or depression in local, regional or national economies would be expected to increase

delinquencies and losses, which would adversely affect our financial condition and results of operations.

If an Increase in Interest Rates Results in a Decrease in Our

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in the foreseeable future.

See " Dividend Policy ".

Forward-Looking Statements

Discussions of certain matters

contained in this report may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as

amended (the " Securities Act " )

and Section 21E of the Exchange Act, and as such, may involve risks and uncertainties.

These forward-looking statements relate to, among

other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities

in the market and statements regarding our mission and vision.

You can generally identify forward-looking statements as statements containing

the words " will, "

" would, " " believe, "

" may, " " could, "

" expect, " " anticipate, "

" intend, " " estimate, "

" assume " or other similar expressions.

Our actual results,

performance and achievements may differ materially from the results, performance and achievements expressed or implied in such forward-looking

The discussion under " Risk Factors "

identifies some of the factors that might cause such a difference, including the following:

· unexpected exogenous events, such as a widespread plague;

· mandates imposed in reaction to such events, such as prohibitions of otherwise permissible activity;

· changes in general economic conditions;

· changes in performance of our automobile contracts;

· increases in interest rates;

· our ability to generate sufficient operating and financing cash flows;

· competition;

· level of losses incurred on contracts in our managed portfolio;

· adverse decisions by courts or regulators

Forward-looking statements

are not guarantees of performance.

They involve risks, uncertainties and assumptions.

Actual results may differ from expectations due

to many factors beyond our ability to control or predict, including those described herein, and in documents incorporated by reference

in this report.

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities

Litigation Reform Act of 1995.

We undertake no obligation

to publicly update any forward-looking information.

You are advised to consult any additional disclosure we make in our periodic reports

filed with the SEC.

See " Where You Can Find More Information "

and " Documents Incorporated by Reference.

Unresolved Staff Comments

Not applicable.

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-K

Item 1A. Risk Factors