What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-11-15 compared with 2022-11-16 · 23 added, 27 removed, 186 unchanged (21% of the section changed)

10 unchanged sentences

Further, our failure to comply with applicable laws and regulations could result in fines, penalties or orders to cease or suspend operations, which could have a material adverse effect on our results of operations.

For example, a bill was recently introduced in the Illinois legislature proposing a 36% APR rate cap to pawn loans made in the state.

If that bill becomes law, then our business in Illinois could be adversely affected.

Negative characterizations of the pawn industry by consumer advocates, media or others could result in increased legislative or regulatory activity, could adversely affect the market value of our publicly traded stock, or could make it harder to operate our business successfully.

7 unchanged sentences

business is concentrated in Texas and Florida.

As of September 30, 2022, more th an 62% of our U.S.

As of September 30, 2023, more than 62% of our U.S.

pawn stores were located in Texas (45%) and Florida (17%), and those stores account for a significant portion of our revenues and profitability.

24 unchanged sentences

The statute of limitations applicable to most of the pre-closing years has now expired, but AlphaCredit has informed us that they filed an amended return for 2016, which they claim extends the statute of limitations for that year.

We are in discussions with AlphaCredit regarding the validity of the indemnity claim, the amount of any continuing exposure and whether some or all of the escrow can now be released.

Those discussions are complicated by the fact that AlphaCredit is now involved in a concurso mercantil (insolvency) proceeding in Mexico.

AlphaCredit is currently in the conciliation phase of the proceeding and management remains in day-to-day control of the business.

In the event that the proceedings move to the bankruptcy or liquidation phase, then we will have to continue our discussions with the liquidation trustee.

We were in discussions with AlphaCredit regarding the validity of the indemnity claim, the amount of any continuing exposure and whether some or all of the escrow can now be released.

Those discussions have been interrupted due to AlphaCredit’s recent emergence from a concurso mercantil (insolvency) proceeding in Mexico with new management.

The escrowed funds were not impacted by that proceeding, and we are continuing to pursue release of the funds.

One person beneficially owns all of our voting stock and generally controls the outcome of all matters requiring a vote of stockholders, which may influence the value of our publicly traded non-voting stock.

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We invested in Cash Converters International Limited for strategic reasons.

We may be required in future periods to impair our investment and recognize related investment losses, as we have done in the past, and we may not realize a positive return on the investment.

Law or regulatory changes in Australia or other jurisdictions in which Cash Converters operates, or other factors, could adversely affect Cash Converters’ operating performance, our share of which would be reflected in our own financial statements due to the equity method of accounting.

Further, if that operating performance, or other factors, adversely impact the value of Cash Converters’ publicly traded stock, then we may be required to impair our investment, as we have done in the past.

We own 43.7% of the outstanding ordinary shares of Cash Converters, which is a publicly traded company based in Australia.

1 unchanged sentence

The success of this strategic investment is dependent on a variety of factors, including Cash Converters’s business performance and the market’s assessment of that performance.

In December 2022, the Australian Parliament passed the Financial Sector Reform Bill 2022, which establishes lending limits on small amount credit contracts.

The bill became effective in June 2023, and could adversely impact Cash Converters’ financial position or results of operations.

In response to the new law, Cash Converters recognized a one-time, non-cash impairment expense of AUD $110.5 million against goodwill in their financial statements for the period ended December 31, 2022 and, based upon our 43.7% ownership of Cash Converters at the time, we recorded $32.4 million of our share of their non-cash goodwill impairment charge during the second quarter of our fiscal 2023.

Any additional decline in Cash Converters’ operating results resulting from the change of law or other factors could adversely affect our financial performance.

We have recorded a number of impairments to the carrying value of our investment in Cash Converters in the past.

After an analysis of Cash Converters’s stock price performance and other factors, we determined the fair value of our investment in Cash Converters at September 30, 2022 was greater than its carrying value.

After an analysis of Cash Converters’ stock price performance and other factors, we determined the fair value of our investment in Cash Converters at September 30, 2023 was greater than its carrying value.

Strategic Investments of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data.” If the fair value of our investment declines and we determine that such decline is other-than-temporary, we may be required to further impair our investment and recognize the related investment loss, which would adversely affect our results of operations and financial position in the period of impairment.

Furthermore, there can be no assurance that we will be able to dispose of some or all of our investment in Cash Converters on favorable terms, should we decide to do so in the future.

Our ability to recover our investments in Rich Data Corporation and Simple Management Group, Inc.

is heavily dependent on the success and performance of those companies, including their respective ability to obtain further debt or equity financing.

We have an investment in RDC and an indirect investment in SMG .

Strategic Investments of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data.” Our ability to recover our investment in either of these companies is heavily dependent on their success and performance, potentially including their ability to obtain further debt or equity financing.

To the extent that either of such companies is not successful, we may be required in future periods to impair our investment and recognize related investment losses.

Our ability to recover our investments in other companies (such as our indirect investment in Simple Management Group, Inc.

and our investment in Rich Data Corporation) is heavily dependent on the success and performance of those companies, including their respective ability to obtain further debt or equity financing.

We have certain investments in other companies.

Organization and Summary of Significant Accounting Policies — Investments of Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplemental Data.” Our ability to recover our investment in these companies is heavily dependent on their success and performance, potentially including their ability to obtain further debt or equity financing.

To the extent that any of such companies is not successful, we may be required in future periods to impair our investment and recognize related investment losses.

We may incur property, casualty or other losses, including losses related to natural disasters such as hurricanes, earthquakes and volcanoes.

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We assess goodwill for impairment at least annually, which could result in a material, non-cash write-down and could have a material adverse effect on our results of operations and financial conditions.

The carrying value of our goo dwill was $286.8 million, or approximately 21% o f our total assets, as of September 30, 2022.

The carrying value of our goo dwill was $302.4 million, or approximately 21% of our total assets, as of September 30, 2023.

We test goodwill and intangible assets with an indefinite life for potential impairment annually, or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value.

22 unchanged sentences

Taking into consideration the shares that are issued and outstanding, as well as the shares that have been reserved for issuance pursuant to convertible notes, outstanding equity incentive compensation awards and the conversion of the Class B Common Stock, we had approximately 3.0 million shar es of authorized Class A Common Stock available for other uses as of September 30, 2023.

Therefore, our ability to issue shares of Class A Common Stock (other than pursuant to the existing reserved-for commitments), or securities or instruments that are convertible into or exchangeable for shares of Class A Common Stock, may be limited until such time additional authorized, unissued and unreserved shares become available or unless we determine we are unlikely to issue all of the shares that are currently reserved.

We expect that number will be reduced to 2.1 million following the issuance of currently approved Long-Term Incentive awards in November 2023 .

There fore, our ability to issue shares of Class A Common Stock (other than pursuant to the existing reserved-for commitments), or securities or instruments that are convertible into or exchangeable for shares of Class A Common Stock, may be limited until such time additional authorized, unissued and unreserved shares become available or unless we determine we are unlikely to issue all of the shares that are currently reserved.

During this time, for example, our ability to complete equity or equity-linked financings or other transactions (including strategic acquisitions) that involve the issuance or potential issuance of Class A Common Stock may be limited.

1 unchanged sentence

General Risks

Public health issues, including the continuing COVID-19 pandemic, could adversely affect our financial condition, results of operations or liquidity.

Our business may be impacted by public health issues, including the continuing COVID-19 pandemic, other pandemics and the spread of contagious diseases.

Public health issues could adversely affect our financial condition, results of operations or liquidity.

Our business may be impacted by public health issues, such as COVID-19, other pandemics and the spread of contagious diseases.

Such public health issues, and the government and consumer responses thereto, may (i) limit our ability to supply products and services to our customers as a result of store closures, reduced access to or foot traffic in our stores, or labor shortages, (ii) adversely affect the demand for our products and services or (iii) cause other unforeseen negative developments.

Any of these factors may adversely affect our financial condition, results of operations or liquidity.

The COVID-19 pandemic adversely affected our gross profit and earnings during the latter half of fiscal 2020 and into fiscal 2021.

latter part of fiscal 2021, we saw pawn transaction activity start to rebuild.

That has continued to date, and our pawn loans outstanding ("PLO") balances now exceed pre-pandemic levels, which will drive accelerating pawn service charges ("PSC") revenue in the coming quarters given the natural lag between pawn originations and related fees.

Despite the recovery in pawn transaction activity, new COVID-19 variants could affect portions of our business, such as managing appropriate staffing at the store level.

Our estimates, judgments and assumptions related to COVID-19 could vary over time, and there can be no assurance that the continuing pandemic will not have an adverse effect on our results of operations, financial position and cash flows in future periods.

We have significant operations in Latin America, and changes in the business, regulatory, political or social climate could impact our operations there, which could adversely affect our results of operations and growth plans.

14 unchanged sentences

Potential actions range from claims and assertions arising in the ordinary course of business (such as contract, customer or employment disputes) to more significant corporate-level matters or shareholder litigation.

All of these matters are subject to inherent uncertainties, and unfavorable rulings could

occur, which could include monetary damages, fines and penalties or other relief.

All of these matters are subject to inherent uncertainties, and unfavorable rulings could occur, which could include monetary damages, fines and penalties or other relief.

Any unfavorable ruling or outcome could have a material adverse effect on our results of operations or could negatively affect our reputation.

27 unchanged sentences

We may not have the resources or technical expertise to anticipate or prevent rapidly evolving types of cyber attacks.

Attacks may be targeted at us, our service providers, our customers or others

who have entrusted us with information.

Attacks may be targeted at us, our service providers, our customers or others who have entrusted us with information.

Actual or anticipated attacks may cause us to incur increased costs, including costs to hire additional personnel, purchase additional protection technologies, train Team Members and engage third-party experts and consultants.

10 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 1A. Risk Factors