What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-16 compared with 2025-03-12 · 175 added, 215 removed, 513 unchanged (43% of the section changed)

4 unchanged sentences

our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans,

objectives, expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated in these

forward-looking statements as a result of a number of factors.

We use words such as anticipate, estimate, plan, project, continuing, ongoing,

expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our

plans, objectives, expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated

in these forward-looking statements as a result of a number of factors.

We use words such as anticipate, estimate, plan, project, continuing,

ongoing, expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements.

See “Cautionary

17 unchanged sentences

In this report, we refer to all of such contracts and loans as “automobile contracts.”

We were incorporated and

began our operations in March 1991.

From inception through December 31, 2024, we have purchased a total of approximately $23.0 billion

of automobile contracts from dealers.

In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers

and acquisitions in 2002, 2003, 2004 and 2011.

Contract purchase volumes and managed portfolio levels for the five years ended December

31, 2024 are shown in the table below.

We were incorporated and began

our operations in March 1991.

From inception through December 31, 2025, we have purchased a total of approximately $24.7 billion of automobile

contracts from dealers.

Contract purchase volumes and managed portfolio levels for the five years ended December 31, 2025 are shown in

the table below.

Managed portfolio comprises both contracts we owned and those we were servicing for third parties.

2 unchanged sentences

Contracts Purchased in Period

Managed Portfolio at Period End

Our principal executive offices

2 unchanged sentences

Credit and underwriting

functions are performed primarily in our California branch with certain of these functions also performed in our Florida and Nevada branches.

functions are performed primarily in our California branch with certain of these functions also performed in our Florida, Nevada, and

Virginia branches.

We service our automobile contracts from our California, Nevada, Virginia, Florida, and Illinois branches.

10 unchanged sentences

and on an interim basis through warehouse credit facilities.

All such financings have involved identification of specific automobile contracts,

sale of those automobile contracts (and associated rights) to one of our special-purpose subsidiaries, and issuance of asset-backed securities

to be purchased by institutional investors.

Depending on the structure, these transactions may be accounted for under generally accepted

accounting principles as sales of the automobile contracts or as secured financings.

All such financings have involved identification of specific automobile

contracts, sale of those automobile contracts (and associated rights) to one of our special-purpose subsidiaries, and issuance of asset-backed

securities to be purchased by institutional investors.

Depending on the structure, these transactions may be accounted for under generally

accepted accounting principles as sales of the automobile contracts or as secured financings.

All of our active securitizations are structured

16 unchanged sentences

of each calendar quarter, resulting in four securitizations per calendar year.

However, we completed only three securitizations in 2020.

In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets

in which our securitizations are executed.

Subsequently we successfully completed securitizations in June and September 2020.

Our recent history of term securitizations is summarized

3 unchanged sentences

Number of Term Securitizations

Amount of Receivables

Generally, prior to a securitization

1 unchanged sentence

Our current short-term

funding capacity is $535 million, comprising two credit facilities.

funding capacity is $702.5 million, comprising three credit facilities.

The first credit facility was established in May 2012.

1 unchanged sentence

was most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period through July

In addition, the capacity was increased to $335 million in December 2024.

In addition, the capacity was increased from $200 million to $335 million in December 2024.

In November 2015, we entered

into another $100 million facility.

In June 2022, we doubled the capacity for this facility from $100 million to $200 million.

This facility

was most recently renewed in March 2024, extending the revolving period to March 2026, followed by an amortization period to March 2028.

into a $100 million facility with Ares Agent Services, L.P.

In June 2022, we increased the capacity of our credit agreement from $100

million to $200 million.

This facility was most recently renewed in March 2024, extending the revolving period to March 2026, followed

by an amortization period to March 2028.

In October 2025, we entered

into a new $167.5 million facility.

This facility has a two year revolving period to October 2027, with an optional amortization period

through April 2029.

In a securitization and in

14 unchanged sentences

Critical Accounting Estimates

We believe that our accounting

policies related to (a) Finance Receivables at Fair Value, (b) Allowance for Finance Credit Losses, (c) Term Securitizations, (d) Accrual

for Contingent Liabilities and (e) Income Taxes are the most critical to understanding and evaluating our reported financial results.

We believe that our

accounting policies related to Finance Receivables at Fair Value and Term Securitizations are the most critical to understanding and

evaluating our reported financial results.

Such policies are described below.

108 unchanged sentences

our retained interests in the respective trusts.

Accrual for Contingent Liabilities

We are routinely involved

in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued.

counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it

is both probable that a liability has been incurred and the amount of the loss can be reasonably determined.

We have recorded a liability

as of December 31, 2024, which represents our best estimate of probable incurred losses for legal contingencies at that date.

of losses that may ultimately be incurred cannot be estimated with certainty.

However, based on such information as is available to us,

we believe that the range of reasonably possible losses for the legal proceedings and contingencies described or referenced above, as

of December 31, 2024 does not exceed $3.2 million.

Accordingly, we believe that

the ultimate resolution of such legal proceedings and contingencies, after taking into account our current litigation reserves, should

not have a material adverse effect on our consolidated financial condition.

We note, however, that in light of the uncertainties inherent

in contested proceedings, there can be no assurance that the ultimate resolution of these matters will not significantly exceed the reserves

we have accrued;

as a result, the outcome of a particular matter may be material to our operating results for a particular period, depending

on, among other factors, the size of the loss or liability imposed and the level of our income for that period.

We account for income taxes

under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax

consequences of events that have been included in the financial statements.

Under this method, deferred tax assets and liabilities are

determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in

effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities

is recognized in income in the period that includes the enactment date.

Deferred tax assets are recognized

subject to management’s judgment that realization is more likely than not.

A valuation allowance is recognized for a deferred tax

asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not

In making such judgements, significant weight is given to evidence that can be objectively verified.

In determining the possible

future realization of deferred tax assets, we have considered future taxable income from the following sources:

(a) reversal of taxable

temporary differences;

and (b) forecasted future net earnings from operations.

Based upon those considerations, we have concluded that

it is more likely than not that the U.S.

and state net operating loss carryforward periods provide enough time to utilize the deferred

tax assets pertaining to the existing net operating loss carryforwards and any net operating loss that would be created by the reversal

of the future net deductions which have not yet been taken on a tax return.

Our estimates of taxable income are forward-looking statements,

and there can be no assurance that our estimates of such taxable income will be correct.

Factors discussed under "Risk Factors,"

and under the heading “Cautionary Note Regarding Forward-Looking Statements." may affect whether such projections prove to

We recognize interest and

penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statements of operations.

Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.

Uncertainty of Capital Markets and General Economic Conditions

4 unchanged sentences

conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar

However, we completed only three securitizations in 2020.

In April 2020 we postponed our planned securitization due to the onset

of the pandemic and the effective closure of the capital markets in which our securitizations are executed.

Subsequently, we successfully

completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2025.

Financial Covenants

Certain of our securitization

transactions and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results.

Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels.

In addition, certain

securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default

if a default occurred under a different facility.

Our warehouse credit facilities

and our residual interest financings contain various financial covenants requiring certain minimum financial ratios.

Such covenants include

maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels.

In addition, certain securitization and

non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default

occurred under a different facility.

As of December 31, 2025 we were in compliance with all such financial covenants.

2 unchanged sentences

2025 with the year ended December 31, 2024

During the year ended

December 31, 2024, our revenues were $393.5 million, an increase of $41.5 million, or 11.8%, from the prior year revenues of $352.0 million.

The primary reason for the increase in revenues is the increase in interest income resulting from the increase in the average outstanding

balance of finance receivables measured at fair value.

Revenues for the years ended December 31, 2024 and 2023 include fair value marks

of $21.0 and $12.0 million, respectively, to the carrying value of the portion of the receivables portfolio accounted for at fair value.

The marks are estimates based on our evaluation of the appropriate fair value and future earnings rate of existing receivables compared

to recently acquired receivables and increases or decreases in our estimates of future net losses.

The fair value mark in the current

period also includes an increase in our estimates of cash receipts from interest and fees compared to our estimates at the time of acquisition.

For the year ended December 31, 2024, our re-evaluation of the fair values of these receivables resulted in a mark up for certain older

receivables and a mark down to the fair values of newer receivables.

The fair value mark up on the older receivables exceeded the mark

down to the newer receivables resulting in a net mark up of $21.0 million.

the year ended December 31, 2025, our revenues were $434.5 million, an increase of $41.0 million, or 10.4%, from the prior year

revenues of $393.5 million.

The primary reason for the increase in revenues is the increase in interest income resulting from the

increase in the average outstanding balance of finance receivables measured at fair value.

Revenues for the years ended December 31,

2025 and 2024 include fair value marks of $6.5 and $21.0 million, respectively, to the carrying value of the portion of the

receivables portfolio accounted for at fair value.

The marks are estimates based on our evaluation of the appropriate fair value and

future earnings rate of existing receivables compared to recently acquired receivables and increases or decreases in our estimates

of future net losses.

The fair value mark in the current period also includes an increase in our estimates of cash receipts from

For the year ended December 31, 2025, our re-evaluation of the fair values of these receivables resulted in a mark up for

certain older receivables and a mark down to the fair values of newer receivables.

The fair value mark up on the older receivables

exceeded the mark down to the newer receivables resulting in a net mark up of $6.5 million.

Interest income for the year

2 unchanged sentences

for the increase in interest income is the 15.1% increase in the average balance of our loan portfolio over the prior year period.

interest yield on our total loan portfolio stayed the same at 11.3% in the prior year period to 11.3% in the current year period.

table below shows the average balance and interest yield of our loan portfolio for the years ended December 31, 2024 and 2023:

interest yield on our total loan portfolio increased to 11.4% from 11.3% in the prior year period.

The table below shows the average balance

and interest yield of our loan portfolio for the years ended December 31, 2025 and 2024:

Year Ended December 31,

14 unchanged sentences

Interest expense is affected by the volume of automobile contracts we purchased during the trailing 12-month period

and the use of our warehouse facilities and asset-backed securitizations to finance those contracts and, more significantly, on the interest

and the use of our warehouse facilities and asset-backed securitizations to finance those contracts and on the interest

rates on these facilities.

13 unchanged sentences

$406.5 million for the year ended December 31, 2025, compared to $366.1 million for the prior year, an increase of $40.4 million, or 11.0%.

The increase is primarily due to increases in interest expense, employee costs and the amount of reductions to provision for credit losses

Employee costs increased by

$8.0 million or 9.1%, to $96.2 million during the year ended December 31, 2024, representing 26.3% of total operating expenses.

costs were $88.1 million in the prior year, or 30.3% of total operating expenses.

The increase in employee costs can be attributed to

the increase in our outstanding managed portfolio.

The table below summarizes

our employees by category as well as contract purchases and units in our managed portfolio as of, and for the years ended, December 31,

2024 and 2023:

The increase is primarily due to increases in interest expense.

Employee costs decreased by

$823,000 or 0.9%, to $95.4 million during the year ended December 31, 2025, representing 23.5% of total operating expenses.

Employee costs

were $96.2 million in the prior year, or 26.3% of total operating expenses.

The table below summarizes our

employees by category as well as contract purchases and units in our managed portfolio as of, and for the years ended, December 31, 2025

December 31, 2025

13 unchanged sentences

services, and telecommunications.

General and administrative expenses were $54.7 million, an increase of $4.7 million, or 9.4%, compared

General and administrative expenses were $52.9 million, a decrease of $1.8 million, or 3.4%, compared

to the previous year and represented 13.0% of total operating expenses.

2 unchanged sentences

expense represented 57.1% of total operating expenses in 2025.

Interest on securitization

trust debt increased by $39.6 million, or 32.6%, for the year ended December 31, 2024 compared to the prior year.

The average balance

of securitization trust debt increased 11.3% to $2,596.6 million for the year ended December 31, 2024 compared to $2,333.5 million for

the year ended December 31, 2023.

The annualized average rate on our securitization trust debt was 6.2% for the year ended December 31,

2024 compared to 5.2% in the prior year period.

For each quarterly securitization transaction, the blended cost of funds is ultimately

the result of many factors including the market interest rates for benchmark swaps of various maturities against which our bonds are

priced and the margin over those benchmarks that investors are willing to accept, which in turn, is influenced by investor demand for

our bonds at the time of the securitization.

These and other factors have resulted in fluctuations in our securitization trust debt interest

The blended interest rates of our recent securitizations are summarized in the table below:

Interest on securitization trust

debt increased by $25.9 million, or 16.1%, for the year ended December 31, 2025 compared to the prior year.

The average balance of securitization

trust debt increased 13.8% to $2,955.3 million for the year ended December 31, 2025 compared to $2,596.6 million for the year ended December

The annualized average rate on our securitization trust debt was 6.3% for the year ended December 31, 2025 compared to 6.2%

in the prior year period.

For each quarterly securitization transaction, the blended cost of funds is ultimately the result of many factors

including the market interest rates for benchmark swaps of various maturities against which our bonds are priced and the margin over those

benchmarks that investors are willing to accept, which in turn, is influenced by investor demand for our bonds at the time of the securitization.

These and other factors have resulted in fluctuations in our securitization trust debt interest costs.

The blended interest rates of our

recent securitizations are summarized in the table below:

Blended Cost of Funds on Recent Asset-Backed Term Securitizations

3 unchanged sentences

lines of credit was $27.4 million for the year ended December 31, 2025 compared to $19.3 million in the prior year.

The increase was due

to higher rates of our credit lines during 2024 compared to 2023.

The average yield of our warehouse debt was 10.8% during 2024 compared

to 10.6% million in 2023.

In June 2021, we completed a

residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million.

2024, we completed a new residual interest financing of our residual interests from previously issued securitizations in the amount of

$50.0 million.

Interest expense on residual interest financing was $8.7 million for the year ended December 31, 2024 compared to $4.2

million in the prior year.

The increase was

primarily due to the higher utilization of our credit lines during the year compared to last year.

The average balance of our warehouse

debt was $288.0 million during the year 2025, compared to $178.5 million in 2024.

The average yield of our warehouse debt was 9.5% during

2025 compared to 10.8% million in 2023.

In June 2021, March 2024, and

again in March 2025, we completed a securitization of residual interests from other previously issued securitizations in the amount of

$50 million, $50 million, and $65 million, respectively.

Interest expense on residual interest financing was $15.0 million for the year

ended December 31, 2025, compared to $8.7 million in the prior year.

Interest expense on our subordinated

3 unchanged sentences

The average interest rate on our subordinated notes was

9.8% during 2024 compared to 8.7% million in 2023.

9.8% during 2025 and in 2024.

The following table presents

12 unchanged sentences

Ratio of average interest earning assets to average interest bearing liabilities

Average balances are based on month end balances except for

warehouse lines of credit, which are based on daily balances.

Average balances are based on month end balances except for warehouse lines of credit, which are based on daily balances.

Net of deferred fees and direct costs.

2 unchanged sentences

Compared to December 31, 2024

Change Due to Volume

Change Due to Rate

Interest Earning Assets

7 unchanged sentences

Net interest income/spread

For our receivables originated

prior to January 2018, we maintain an allowance for credit losses on automobile contracts held on our balance sheet, which reflects our

estimates of probable credit losses that can be reasonably estimated.

For the year ended December 31, 2025, we recorded a reduction to

6 unchanged sentences

receivables originated through December 2017, which we refer to as our legacy portfolio.

The legacy portfolio balance decreased

from $27.6 million on December 31, 2023 to $5.4 million on December 31, 2024.

Finance receivables that we have originated since January

2018 are accounted for at fair value.

Under the fair value method of accounting, we recognize interest income net of expected credit

Thus, no provision for credit loss expense is recorded for finance receivables measured at fair value.

The legacy portfolio balance decreased from

$5.4 million on December 31, 2024 to $520,000 on December 31, 2025.

Finance receivables that we have originated since January 2018 are

accounted for at fair value.

Under the fair value method of accounting, we recognize interest income net of expected credit losses.

no provision for credit loss expense is recorded for finance receivables measured at fair value.

Sales expense consists primarily

3 unchanged sentences

Sales expense increased

by $1.5 million to $22.8 million during the year ended December 31, 2024 and represented 6.2% of total operating expenses.

by $49,000 to $22.8 million during the year ended December 31, 2025 and represented 5.6% of total operating expenses.

We purchased $1,638.3

million of new contracts during the year ended December 31, 2025 compared to $1,681.9 million in the prior year period.

6 unchanged sentences

In the prior period, our income tax expense

was $15.6 million, also representing a 26% effective tax rate.

was $8.2 million, representing a 30% effective tax rate.

Liquidity and Capital Resources

15 unchanged sentences

Net cash provided by operating

activities for the years ended December 31, 2024, 2023 and 2022 was $233.8 million, $238.0 million and $215.9 million, respectively.

cash from operating activities is generally provided by net income from operations adjusted for significant non-cash items such as our

provision for credit losses and interest accretion on fair value receivables.

activities for the years ended December 31, 2025, and 2024 was $289.0 million and $233.8 million, respectively.

Net cash from operating

activities is generally provided by net income from operations adjusted for significant non-cash items such as our provision for credit

losses and interest accretion on fair value receivables.

Net cash used in investing

activities for the year ended December 31, 2024, 2023 and 2022 was $769.7 million, $359.5 million and $713.9 million, respectively.

used in investing activities generally relates to purchases of automobile contracts.

Purchases of finance receivables were $1,653.0 million

(includes acquisition fees paid), $1,251.0 million and $1,673.2 million in 2024, 2023 and 2022, respectively.

Cash provided by investing

activities primarily results from principal payments and other proceeds received on finance receivables.

activities for the year ended December 31, 2025, and 2024 was $590.1 million, and $769.7 million, respectively.

Cash used in investing

activities generally relates to purchases of automobile contracts.

Purchases of finance receivables were $1,639.0 million (includes acquisition

fees paid), and $1,653.0 million in 2025, and 2024, respectively.

Cash provided by investing activities primarily results from principal

payments and other proceeds received on finance receivables.

Net cash provided by financing

activities were $335.9 million and $547.9 million in 2025 and 2024, respectively.

Net cash used in financing activities for the year ended

December 31, 2022 was $484.2 million.

Cash used or provided by financing activities is primarily related to the issuance of securitization

trust debt, reduced by the amount of repayment of securitization trust debt and net proceeds or repayments on our warehouse lines of credit

and other debt.

We issued $1,453.9 million in new securitization trust debt in 2024 compared to $1,235.5 million in 2023 and $1,411.0

million in 2022.

Repayments of securitization debt were $1,124.1 million, $1,078.4 million and $1,060.1 million in 2024, 2023 and 2022,

respectively.

Cash used or provided by financing activities is primarily

related to the issuance of securitization trust debt, reduced by the amount of repayment of securitization trust debt and net proceeds

or repayments on our warehouse lines of credit and other debt.

We issued $1,665.3 million in new securitization trust debt in 2025 compared

to $1,453.9 million in 2024.

Repayments of securitization debt were $1,272.0 million, and $1,124.1 million in 2025, and 2024, respectively.

We purchase automobile contracts

17 unchanged sentences

As of December 31, 2025, we had unrestricted

cash of $11.7 million and $124.1 million aggregate available borrowings under our two warehouse credit facilities (assuming the availability

cash of $6.3 million and $375.3 million aggregate available borrowings under our three warehouse credit facilities (assuming the availability

of sufficient eligible collateral).

3 unchanged sentences

$345.6 million of notes sold.

Cash proceeds from this securitization were used to pay down the outstanding balance on our two warehouse

credit facilities thus increasing the amounts available for borrowing under these facilities.

Our plans to manage our liquidity include

maintaining our rate of automobile contract purchases at a level that matches our available capital, and, as appropriate, minimizing our

operating costs.

If we are unable to complete such securitizations, we may be unable to increase our rate of automobile contract purchases,

in which case our interest income and other portfolio related income could decrease.

Cash proceeds from this securitization were used to pay down the outstanding balance on our warehouse credit

facilities thus increasing the amounts available for borrowing under these facilities.

Our plans to manage our liquidity include maintaining

our rate of automobile contract purchases at a level that matches our available capital, and, as appropriate, minimizing our operating

If we are unable to complete such securitizations, we may be unable to increase our rate of automobile contract purchases, in which

case our interest income and other portfolio related income could decrease.

Our liquidity will also be

2 unchanged sentences

account vary among transactions, our securitization agreements generally provide that we will receive excess cash flows, if any, only

if the amount of credit enhancement has reached specified levels and the delinquency or net losses related to the automobile contracts

if the amount of credit enhancement has reached specified levels and the net losses related to the automobile contracts

in the pool are below certain predetermined levels.

In the event delinquencies or net losses on the automobile contracts exceed such levels,

In the event net losses on the automobile contracts exceed such levels,

the terms of the securitization may require increased credit enhancement to be accumulated for the particular pool.

2 unchanged sentences

Our warehouse credit facilities

contain various financial covenants requiring certain minimum financial ratios and results.

Such covenants include maintaining minimum

levels of liquidity and net worth and not exceeding maximum leverage levels.

In addition, certain of our debt agreements other than our

term securitizations contain cross-default provisions.

Such cross-default provisions would allow the respective creditors to declare a

default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be

accompanied by acceleration of such other indebtedness.

contain various financial covenants requiring certain minimum financial ratios.

Such covenants include maintaining minimum levels of liquidity

and net worth and not exceeding maximum leverage levels.

In addition, certain of our debt agreements other than our term securitizations

contain cross-default provisions.

Such cross-default provisions would allow the respective creditors to declare a default if an event

of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be accompanied by acceleration

of such other indebtedness.

As of December 31, 2025, we were in compliance with all such financial covenants.

16 unchanged sentences

Operating and Finance Leases

(1) Securitization trust debt, in the aggregate amount of $2,594.4 million as of December 31, 2024, is omitted

from this table because it becomes due as and when the related receivables balance is reduced by payments and charge-offs.

Expected payments,

which will depend on the performance of such receivables, as to which there can be no assurance, are $987.8 million in 2025, $696.4 million

in 2026, $470.5 million in 2027, $275.1 million in 2028, $126.6 million in 2029, and $38.0 million in 2030.

(1) Securitization

trust debt, in the aggregate amount of $2,986.6 million as of December 31, 2025, is omitted

from this table because it becomes due as and when the related receivables balance is reduced

by payments and charge-offs.

Expected payments, which will depend on the performance of such

receivables, as to which there can be no assurance, are $1,168.0 million in 2026, $825.5

million in 2027, $498.4 million in 2028, $294.8 million in 2029, $156.3 million in 2030,

and $43.6 million in 2031.

(2) Long-term debt represents subordinated renewable notes.

46 unchanged sentences

$11.8 million outstanding under this facility.

Facility Established in

October 2025.

On October 17, 2025, we entered into a $167.5 million two-year warehouse credit line with Capital One, N.A as the Class

A Lender and Oaktree Asset-Backed Income Private Placement Fund Inc., as the Class B Lenders.

The facility is structured to allow us to

fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Eleven

Funding, LLC.

The facility provides for effective advances up to 95.50% of eligible finance receivables.

The Class A loans under the facility

generally accrue interest during the revolving period at a per annum rate equal to the Term SOFR plus 2.75% per annum, with a minimum

rate of 3.00% per annum and during the amortization period at a per annum rate equal to the Term SOFR plus 3.75% per annum, with a minimum

rate of 4.00% per annum.

The Class B loans under the facility generally accrue interest during the revolving period at a per annum rate

equal to the Term SOFR plus 6.40% per annum, with a minimum rate of 6.65% per annum and during the amortization period at a per annum

rate equal to the Term SOFR plus 7.40% per annum, with a minimum rate of 7.65% per annum.

At December 31, 2025 there was $118.3 million

outstanding under this facility.

Capital Resources

32 unchanged sentences

Residual Interest Financing

May 16, 2018, we completed a $40.0 million securitization of residual interests from previously issued securitizations.

In this residual

interest financing transaction, qualified institutional buyers purchased $40.0 million of asset-backed notes secured by residual interests

in thirteen CPS securitizations consecutively conducted from September 2013 through December 2016, and an 80% interest in a CPS affiliate

that owns the residual interests in the four CPS securitizations conducted in 2017.

The sold notes (“2018-1 Notes”), issued

by CPS Auto Securitization Trust 2018-1, consist of a single class with a coupon of 8.595%.

The notes were paid off in February 2022.

On June 30, 2021, we completed

15 unchanged sentences

under this facility.

On March 20, 2025, we completed

a $65 million securitization of residual interests from previously issued securitizations.

In the transaction, a qualified institutional

buyer purchased $65.0 million of asset-backed notes secured by an 80% interest in a CPS affiliate that owns the residual interests in

five CPS securitizations issued from October 2023 through September 2024.

The sold notes (“2025-1 Notes”), issued by CPS Auto

Securitization Trust 2025-1, consist of a single class with a coupon of 11.00%.

At December 31, 2025, there was $63.5 million outstanding

under this facility.

The agreed valuation of the

collateral for the 2021-1 and 2024-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related securitization

and the over-collateralization of each related securitization, which is the difference between the outstanding principal balances of the

related receivables less the principal balance of the outstanding notes issued in the related securitization.

On each monthly payment

date, the 2021-1 and 2024-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain

a specified minimum collateral ratio.

collateral for the 2021-1, 2024-1, and 2025-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related

securitization and the over-collateralization of each related securitization, which is the difference between the outstanding principal

balances of the related receivables less the principal balance of the outstanding notes issued in the related securitization.

monthly payment date, the 2021-1, 2024-1, and 2025-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal

payment necessary to maintain a specified minimum collateral ratio.

Securitization Trust Debt.

18 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-K

Item 7. Management’s Discussion and Analysis