What changed in this filing

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Item 1. Business

2023-02-06 compared with 2022-02-28 · 170 added, 160 removed, 347 unchanged (49% of the section changed)

FirstCash Holdings, Inc.

and its wholly owned subsidiaries (together, the “Company”) is the leading operator of pawn stores in the U.S.

and Latin America, and following its acquisition of American First Finance (“AFF”) on December 17, 2021 (the “AFF Acquisition”), is a leading provider of technology-driven, retail point-of-sale (“POS”) payment solutions focused on serving credit-constrained consumers.

See Note 3 of Notes to Consolidated Financial Statements for additional information about the AFF Acquisition.

With the AFF Acquisition, the Company now operates two business lines:

pawn operations and retail POS payment solutions.

Its business lines are organized into three reportable segments.

pawn segment consists of all pawn operations in the U.S.

and the Latin America pawn segment consists of all pawn operations in Mexico, Guatemala, Colombia and El Salvador.

The retail POS payment solutions segment consists of AFF operations in the U.S.

and Puerto Rico.

FirstCash Holdings, Inc., along with its wholly owned subsidiaries (together, the “Company”), is the leading operator of pawn stores in the U.S.

and Latin America, and, following its acquisition of AFF in December 2021 (the “AFF Acquisition”), is a leading provider of technology-driven, retail point-of-sale (“POS”) payment solutions focused on serving credit-constrained consumers.

The Company operates two business lines, pawn operations and retail POS payment solutions, which are organized into three reportable segments.

pawn segment consists of all pawn operations in 25 U.S.

states and the District of Columbia, while the Latin America pawn segment consists of all pawn operations in Mexico, Guatemala, Colombia and El Salvador.

The retail POS payment solutions segment consists of the operations of AFF in all 50 states in the U.S., the District of Columbia and Puerto Rico.

The Company’s primary business line continues to be the operation of retail pawn stores, also known as “pawnshops,” which focus on serving cash and credit-constrained consumers.

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Pawn stores also generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers.

The Company’s retail POS payment solutions business line consists solely of the operations of AFF, which focuses on lease-to-own (“LTO”) products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners in all 50 states in the U.S., the District of Columbia and Puerto Rico.

Net revenues (gross profit) from pawn operations comprised 85% of consolidated net revenues in 2022.

The Company’s retail POS payment solutions business line consists solely of the operations of AFF, which focuses on LTO products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners.

AFF’s retail partners provide consumer goods and services to their customers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions.

As one of the largest omni-channel providers of “no credit required” payment options, AFF’s technology set provides consumers with seamless leasing and financing experiences in-store, online, in-cart and on mobile devices.

In connection with the completion of the AFF Acquisition, effective December 16, 2021, the Company completed a holding company reorganization creating a new holding company, FirstCash Holdings, Inc.

In connection with the reorganization, FirstCash Holdings, Inc.

succeeded FirstCash, Inc.

as the public company trading on Nasdaq under the ticker symbol “FCFS” and each outstanding share of FirstCash, Inc.

was converted into an equivalent corresponding share of common stock in FirstCash Holdings, Inc., having the same designations, rights, powers and preferences as the corresponding FirstCash, Inc.

shares that were converted.

FirstCash, Inc.

now operates as a wholly-owned subsidiary of FirstCash Holdings, Inc.

The accompanying audited consolidated results of operations for the year ended December 31, 2022 includes the results of operations for AFF while the comparable prior-year period includes the results of operations for AFF for the period December 17, 2021 to December 31, 2021, affecting the comparability of 2022 and 2021 amounts.

See Note 3 of Notes to Consolidated Financial Statements for additional information about the AFF Acquisition.

The Company’s principal executive offices are located at 1600 West 7th Street, Fort Worth, Texas 76102, and its telephone number is (817) 335-1100.

The Company’s primary websites are www.firstcash.com and www.americanfirstfinance.com .

The Company’s primary corporate website is www.firstcash.com .

Pawn Operations

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The pawn industry in the U.S.

is well established, with the highest concentration of pawn stores located in the Southeast, Midwest and Southwest regions of the country.

The operation of pawn stores is governed primarily by state laws and accordingly, states that maintain regulations most conducive to profitable pawn operations have historically seen the greatest concentration of pawn stores.

is well established, with the highest concentration of pawn stores located in states that have favorable customer demographics and maintain regulations most conducive to profitable pawn operations.

Generally, these states are located in the Southeast, Midwest and Southwest regions of the country, which is where the majority of the Company’s U.S.

stores are located.

Historically, competitor pawn stores in Latin America have limited square footage and focus on providing loans collateralized by gold jewelry or small electronics.

In contrast, a majority of the Company’s pawn stores opened in Latin America are larger format, full-service stores similar to the U.S.

stores, which lend on a wide array of collateral and have a larger retail sales floor.

Accordingly, competition in Latin America with the Company’s larger format, full-service pawn stores is limited.

A large percentage of the population in Mexico and other countries in Latin America is unbanked or under-banked and has limited access to traditional consumer credit.

The Company believes there is significant opportunity for further expansion in Mexico and other Latin American countries due to the large potential consumer base and limited competition from other large format, full-service pawn store operators.

COVID-19 and U.S.

government stimulus initiatives in response thereto significantly impacted the Company’s pawn business beginning in 2020, which continued throughout much of 2021.

For a more detailed discussion of the impact of COVID-19 on the Company’s results of operations see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

stores, which buy, sell and lend on a wide array of merchandise.

Accordingly, competition in Latin America with the Company’s larger format, full-service pawn stores is more limited.

A large percentage of the population in Mexico and other countries in Latin America is unbanked or under-banked with limited access to traditional consumer credit.

The Company believes there is opportunity for further expansion in Mexico and other Latin American countries due to the large potential consumer base and limited competition from other large format, full-service pawn store operators.

Services Offered by the Company’s Pawn Operations

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The Company also melts certain quantities of scrap jewelry and sells the gold, silver and diamonds in the commodity markets.

Merchandise sales accounted for approximately 70% of the Company’s revenue during 2021 or 52% on a pro forma basis after giving effect to the AFF Acquisition as if it had closed on January 1, 2021.

Merchandise sales accounted for 50% of the Company’s revenue during 2022.

Merchandise inventory is acquired primarily through forfeited pawn loan collateral and, to a lesser extent, through purchases of used goods directly from the general public.

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Merchandise acquired by the Company through forfeited pawn loan collateral is carried in inventory at the amount of the related pawn loan, exclusive of any accrued service fees, and purchased inventory is carried at cost.

The Company does not currently provide direct financing to customers for the purchase of merchandise in its pawn stores, but does allow customers to purchase merchandise on an interest-free “layaway” plan.

Beginning in the third quarter of 2022, the Company offers a LTO payment option at its U.S.

pawn stores through AFF (as further described below).

In addition, customers can purchase merchandise on an interest-free “layaway” plan.

Should the customer fail to make a required payment pursuant to a layaway plan, the item is returned to inventory and all or a portion of previous payments are typically forfeited to the Company.

Deposits and interim payments from customers on layaway sales are recorded as deferred revenue and subsequently recorded as retail merchandise sales revenue when the merchandise is delivered to the customer upon receipt of final payment or when previous payments are forfeited to the Company.

The Company anticipates it will provide AFF’s LTO payment option (as further described below) to retail customers in its U.S.

pawn locations in the near future.

Retail sales are seasonally highest in the fourth quarter, associated with holiday shopping and, to a lesser extent, in the first quarter associated with tax refunds in the U.S.

Pawn Lending Activities

The Company’s stores make pawn loans, which are typically small, secured loans, to its customers in order to help them meet instant or short-term cash needs.

The Company’s pawn store locations make pawn loans to their customers in order to help them meet instant or short-term cash needs.

All pawn loans are collateralized by personal property such as jewelry, electronics, tools, appliances, sporting goods and musical instruments.

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There is no collections process and the decision to not repay the loan will not affect the customer’s credit score with any credit reporting agency.

The average amount of a pawn loan at December 31, 2022 was $247 in the U.S.

and $83 in Latin America.

At the time a pawn loan transaction is entered into, an agreement or pawn contract, commonly referred to as a “pawn ticket,” is presented to the borrower for signature that includes, among other items, the borrower’s name and identification information, a description of the pledged goods, amount financed, pawn service fee, maturity date, total amount that must be paid to redeem the pledged goods on the maturity date and the annual percentage rate.

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Pawn loans may be either paid in full with accrued pawn loan fees and service charges or, where permitted by law, may be renewed or extended by the customer’s payment of accrued pawn loan fees and service charges.

pawn loan is not repaid before the expiration of the grace period, the pawn collateral is forfeited to the Company and transferred to inventory at a value equal to the principal amount of the loan, exclusive of accrued service fees.

If a pawn loan is not repaid before the expiration of the grace period, the pawn collateral is forfeited to the Company and transferred to inventory at a value equal to the principal amount of the loan, exclusive of accrued service fees.

Pledged property is held in a secured, non-public warehouse area of the pawn store for the term of the loan and the grace period, unless the loan is repaid earlier.

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As required by applicable law, the amounts of these charges are disclosed to the customer on the pawn ticket.

Pawn loan fees accounted for approximately 28% of the Company’s revenue during 2021, or 21% on a pro forma basis after giving effect to the AFF Acquisition as if it had closed on January 1, 2021.

Pawn loan fees accounted for 21% of the Company’s revenue during 2022.

The amount the Company is willing to finance for a pawn loan is primarily based on a percentage of the estimated retail value of the collateral.

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The Company typically opens new stores in under-served markets and neighborhoods, primarily in Latin America.

After a suitable location has been identified and a lease and the appropriate licenses are obtained, a new store can typically be open for business within six to 12 weeks.

After a suitable location has been identified and a lease and the appropriate licenses are obtained, a new store can typically be open for business within six and 12 weeks.

The investment required to open a new location includes store operating cash, inventory, funds for pawn loans, leasehold improvements, store fixtures, security systems, computer equipment and other start-up costs.

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The Company believes the profitability of its pawnshops is dependent, among other factors, upon its employees’ skills and ability to engage with customers and provide prompt and courteous service.

The Company has employee-training programs that promote customer service, productivity, professionalism and regulatory compliance.

The Company has employee-training programs that promote customer service, productivity, professionalism, regulatory compliance and cyber and information security.

The Company’s proprietary point-of-sale and loan management system tracks certain key transactional performance measures, including pawn loan yields and merchandise sales margins, and permits a store manager or clerk to instantly recall the cost of an item in inventory and the date it was purchased, including the prior transaction history of a particular customer.

It also facilitates the timely valuation of goods by showing values assigned to similar goods.

The Company has networked its stores to allow employees to more accurately determine the retail value of merchandise and to permit the Company’s headquarters to more efficiently monitor, in real time, each store’s operations, including merchandise sales, service charge revenue, pawn loans written and redeemed and changes in inventory.

The Company maintains a well-trained audit and loss prevention staff which conducts regular store visits to verify assets, loans and collateral, and test compliance with regulatory, financial and operational controls.

Management believes the current operating and financial controls and systems are adequate for the Company’s existing store base and can accommodate reasonably foreseeable growth in the near term.

The Company has networked its stores to allow employees to more accurately determine the retail value of merchandise and to permit the Company’s headquarters to more efficiently monitor, in real time, each store’s operations, including merchandise sales, pawn loan fee revenue, pawn loans written and redeemed and changes in inventory.

Management believes its controls and systems are adequate for the Company’s existing store base and can accommodate reasonably foreseeable growth in the near term.

Pawn Store Locations

The Company’s typical large format pawn store is a freestanding building or part of a retail shopping center with dedicated available parking.

The Company’s stores in Latin America tend to be smaller than its U.S.

stores, located mostly in dense urban markets, which may not have dedicated parking.

Management has established a standard store design intended to attract customers and distinguish the Company’s stores from the competition.

As of December 31, 2021, the Company had 2,825 pawn store locations composed of 1,081 stores in 25 U.S.

Many of the Company’s acquired stores in Latin America tend to be smaller than its U.S.

stores, especially those located in dense urban markets, which may not have dedicated parking.

Management has established a standard store design intended to facilitate operations and provide a positive customer experience.

As of December 31, 2022, the Company operated 2,872 pawn store locations composed of 1,101 stores in 25 U.S.

states and the District of Columbia, 1,682 stores in 32 states in Mexico, 61 stores in Guatemala, 14 stores in Colombia and 14 stores in El Salvador.

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Total locations, end of period 1,101 1,771 2,872

(1) In addition to new store openings, the Company strategically relocated five stores in the U.S.

(1) In addition to new store openings, the Company strategically relocated two stores in the U.S.

and two stores in Latin America during the twelve months ended December 31, 2022.

(2) Store consolidations were primarily acquired locations over the past five years which have been combined with overlapping stores and for which the Company expects to maintain a significant portion of the acquired customer base in the consolidated location.

(2) Store consolidations were primarily acquired locations over the past six years which have been combined with overlapping stores and for which the Company expects to maintain a significant portion of the acquired customer base in the consolidated location.

As of December 31, 2022, the Company’s pawn stores were located in the following countries and states:

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Tennessee 49 Tamaulipas 99

Georgia 43 Baja California 84

Washington 31 Jalisco 78

Louisiana 29 Nuevo Leon 77

Georgia 43 Nuevo Leon 87

Washington 30 Baja California 81

Louisiana 29 Jalisco 81

Maryland 28 Estado de Ciudad de Mexico (State of Mexico City) 68

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South Carolina 27 Coahuila 52

Colorado 26 Tabasco 49

Colorado 25 Hidalgo 51

Illinois 25 Guanajuato 48

Kentucky 24 Hidalgo 46

Indiana 23 Chihuahua 45

Kentucky 24 Chihuahua 47

Alabama 23 Tabasco 47

Missouri 23 Sonora 41

Indiana 22 Sinaloa 31

Oklahoma 17 Quintana Roo 30

Alabama 9 Sinaloa 31

Alaska 6 Michoacan 28

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District of Columbia 3 San Luis Potosi 23

Mississippi 2 Aguascalientes 21

Nebraska 1 Durango 20

Wyoming 1 Campeche 18

total 1,081 Queretaro 18

Mississippi 2 Durango 21

Nebraska 1 Aguascalientes 20

Wyoming 1 Queretaro 19

total 1,101 Campeche 18

Baja California Sur 13

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These competitive conditions may adversely affect the Company’s pawn revenue and profitability and its ability to expand and execute its pawn business strategy.

The Company believes the primary elements of competition in the pawn industry are store location, customer service, the ability to lend competitive amounts on pawn loans and to sell popular retail merchandise at competitive prices.

The Company believes the primary drivers for competitive success in the pawn industry are store location, customer service, the ability to lend competitive amounts on pawn loans and to sell popular retail merchandise at competitive prices.

In addition, the Company competes with other lenders and retailers to attract and retain employees with competitive compensation programs.

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In addition, the Company competes with other non-pawn lenders, such as banks and consumer finance companies, which generally lend on an unsecured as well as a secured basis.

Other lenders may and do lend money on terms more favorable than those offered by the Company.

Other lenders may, and do, lend money on financial terms more favorable than those offered by the Company.

Management believes the pawn industry remains highly fragmented with an estimated 12,000 to 14,000 total pawnshops in the U.S.

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Including the Company, there are two publicly-held, U.S.-based pawnshop operators, both of which have pawn operations in the U.S., Mexico, Guatemala and El Salvador.

Of these two, the Company has the higher store count and the largest market capitalization as of December 31, 2021, and the Company believes it is the largest public or private operator of large format, full-service pawn stores in the U.S.

The Company is the largest public or private operator of large format, full-service pawn stores in the U.S.

Retail POS Payment Solutions Operations

On December 17, 2021, the Company completed the AFF Acquisition, resulting in AFF becoming a wholly owned subsidiary of and new business line for the Company.

AFF facilitates customized LTO and retail finance programs to its merchant partners that allows those merchant partners to complete sales by providing their customers with an attractive retail POS payment solution.

AFF facilitates customized LTO and retail finance programs to its merchant partners that allows those merchant partners to complete sales by providing their customers with a retail POS payment solution.

Customers can apply for AFF’s products online or through their mobile devices and complete the process electronically or in person at one of AFF’s merchant partner locations.

AFF primarily serves customers who are credit-constrained who may not qualify for prime or near prime retail payment options.

On a pro forma basis after giving effect to the AFF Acquisition as if it had closed on January 1, 2021, AFF would have accounted for 27% of the Company’s total revenues during 2021.

Net revenues (gross profit) from AFF accounted for 15% of the Company’s total net revenues during 2022.

Products Offered by AFF

AFF’s merchant partners provide financing of consumer goods and services to their customers using one of AFF’s retail POS payment options, including an LTO product, a merchant-based retail installment sales agreement (“RISA”) or a bank-originated installment loan to facilitate payments on such transactions.

AFF’s merchant partners may provide consumer goods and services to their customers using one of AFF’s retail POS payment options, including an LTO product, a merchant-based retail installment sales agreement (“RISA”) or a bank-originated installment loan, to facilitate payments on such transactions.

The merchant partners generally choose a single solution from one of these three available options to offer to their customers at a given location.

The merchant’s selection of the appropriate retail POS payment option depends upon which payment options are allowable under applicable state law, whether AFF’s bank partner makes loans in the state where the merchant is located and by the products or services offered by the merchant.

The majority of AFF’s originations are facilitated with the LTO product, with retailers of tangible personal property most commonly using the LTO product.

The merchant’s selection of the appropriate retail POS payment option depends upon which payment options are allowable under applicable state law, whether AFF’s bank partner makes loans in the state where the merchant is located and the type of products or services offered by the merchant.

The majority of AFF’s originations are facilitated with the LTO product, with retailers of furniture and other tangible personal property most commonly using the LTO product.

The RISA and bank-originated products are more commonly offered in situations where services are being offered by the merchant.

Each of these retail POS payment options is subject to AFF’s (or AFF’s partner bank’s) proprietary technology-driven decisioning process as further described below.

AFF’s ability to customize the technology and offer a choice between retail POS payment options gives its merchant partners the advantage of flexibility.

AFF’s ability to customize the technology and offer a choice between retail POS payment options provides its merchant partners the ability to pick and choose the most effective solution for its business and customers.

The following is a description of the three primary retail POS payment options offered by AFF:

• LTO - LTO transactions involve the purchase by AFF of tangible personal property directly from the merchant partner and a subsequent lease of that merchandise by AFF to the customer.

The customer has the right to acquire ownership of the leased merchandise either through an early buyout option, another early purchase option after the early buyout option expires, or through payment of all required lease payments.

To take advantage of the early buyout option, the customer generally has between 90 and 105 days to pay the cash price of the leased merchandise, plus a nominal early

The customer can still utilize an early purchase option after the 90 to 105-day period and obtain ownership early, while also saving money, by paying a certain percentage of the remaining lease payments (usually established by applicable state law).

The customer can also obtain ownership of the merchandise by simply paying all of the remaining lease payments as they become due.

Conversely, the customer has the right to cancel the lease at any time by returning the merchandise and making all scheduled payments due through the minimum lease holding period, which is typically 60 days.

Leased merchandise contracts can typically be renewed for between six to 24 months.

The initial term of the leased merchandise contracts are typically 60 days and can be renewed for a total term of between six and 24 months.

The customer has the right to acquire ownership of the leased merchandise either through an early buyout option, another early purchase

option after the early buyout option expires, or through payment of all required lease renewal payments.

To take advantage of the early buyout option, the customer generally has between 90 and 105 days to pay the cash price of the leased merchandise, plus a nominal early buyout fee.

The customer can still utilize a purchase option after the early buyout period ends and obtain ownership before the end of the lease by paying a certain percentage of the remaining lease renewal payments (usually established by applicable state law).

The customer can also obtain ownership of the merchandise by simply paying all of the remaining lease renewal payments as they become due.

Conversely, the customer has the right to choose not to renew the lease at any time by returning the merchandise and making all scheduled payments due through the initial lease term.

AFF offers the LTO retail POS payment option to merchant partners in 44 U.S.

states, the District of Columbia and Puerto Rico and it accounted for 64% of AFF’s total revenues for the full year ended December 31, 2021 on a pro forma basis.

states, the District of Columbia and Puerto Rico and it accounted for 77% of AFF’s total revenues during 2022.

• RISA - The RISA transaction involves the purchase of either tangible personal property or services from the merchant partner by the customer.

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The customer can take advantage of an early payoff discount, whereby the customer generally has between 90 and 105 days to pay the original principal amount, plus a nominal early payoff discount fee (equal to or less than the accrued interest charges), without incurring any additional interest charges.

RISA finance receivables typically have a term ranging from six to 24 months, and when utilized for the purchase of tangible personal property, are generally secured by such tangible personal property.

RISA finance receivables typically have a term ranging from six and 24 months, and when utilized for the purchase of tangible personal property, are generally secured by such tangible personal property.

AFF facilitates the RISA retail POS payment option with merchant partners in 20 U.S.

states and it accounted for 18% of AFF’s total revenues for the full year ended December 31, 2021 on a pro forma basis.

states and it accounted for 11% of AFF’s total revenues during 2022.

• Bank-originated installment loans - The customer enters into an installment loan directly with FinWise Bank (the “Bank”) for the purchase of a good or service from the merchant partner.

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The customer can take advantage of an early payoff discount, whereby the customer generally has between 90 and 105 days to pay the original principal amount (including any origination fee) without paying any interest charges.

Bank-originated loans typically have a term ranging from six to 24 months and can be either secured by tangible personal property or unsecured.

Approximately 28% of these loans are not related to the purchase of property or services but rather are loans with cash proceeds issued directly to the customer.

Bank-originated loans typically have a term ranging from six and 24 months and can be either secured by tangible personal property or unsecured.

Approximately 75% of these loans are related to the purchase of property or services while approximately 25% are loans with cash proceeds issued directly to the customer.

The bank-originated installment loan retail POS payment option is made available to merchant partners in 34 U.S.

states and it accounted for 18% of AFF’s total revenues for the full year ended December 31, 2021 on a pro forma basis.

states and it accounted for 12% of AFF’s total revenues during 2022.

Decisioning Process

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The sophisticated algorithms consider external and internal data points beyond traditional credit scores, allowing AFF or the Bank to approve customers that do not have a credit score.

Over 90% of AFF applications submitted are automatically decisioned within 10 seconds on average, creating a highly efficient, scalable model.

AFF employs an automated application decisioning process, creating a highly efficient, scalable model.

While the Bank partner utilizes AFF’s technology platform to process and evaluate consumer applications originated by the Bank, all credit underwriting and approval criteria used by the Bank to underwrite the loans are provided and approved by the Bank.

Servicing & Collections Process

The amount of a customer’s contractual periodic payment (i.e., weekly, bi-weekly, semi-monthly, or monthly) is generally based on a customer's pay frequency and the term of the contract.

Customer Service

AFF believes its strong focus on building a positive relationship with the customer and ensuring high levels of customer satisfaction generates repeat customer business and long-lasting relationships with its merchant partners.

Customers receive an introductory email from AFF’s customer service team to welcome them as new customers to AFF, answer any questions they may have about their new account and remind them of their payment schedule.

Existing customers have access to AFF’s customer service team and online customer portal to answer questions about their lease, RISA or loan or to provide comments or complaints about merchant partners.

For those customers that utilize AFF’s LTO solution and wish to choose not to renew their lease, AFF’s customer service team can also assist with the non-renewal process.

The amount and timing of a customer’s contractual periodic payment (i.e., weekly, bi-weekly, semi-monthly, or monthly) is generally based on a customer's pay frequency and the term of the contract.

Customer payments are typically processed through automated clearing house payments or debits to the customer’s payment card (e.g., through a Visa or MasterCard network).

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Business—Government Regulation” for further information about applicable collections laws AFF is subject to.

Customer Service

This focus on customer service begins on day one with a phone call or email from AFF’s customer service team to welcome new customers to AFF, answer any questions they may have about their new account and confirm they are aware of their repayment schedule.

Existing customers have access to AFF’s customer service team at all times to answer questions about their lease, RISA or loan or to provide comments or complaints about merchant partners.

For those customers that utilize AFF’s LTO solution and wish to cancel their lease, AFF’s customer service team can also assist with the cancellation process.

AFF has also made significant investments to make the application process for its LTO, RISA or loan products user-friendly for its customers.

AFF has also made significant investments to make the application process for its LTO, RISA or bank loan products user-friendly for its customers.

AFF customers can apply for the AFF products via text-2-apply, QR codes, web applications on merchant websites, merchant portal applications, in-cart plug-in experiences and third-party waterfall applications.

Upon submission of an application, AFF’s platform typically communicates a decision within seconds, providing a near immediate response to the customer.

The customer then purchases goods or services using one of AFF’s retail POS payment options and makes scheduled payments, which can be managed by the customer via phone or online.

Upon submission of an application, AFF’s platform typically communicates a decision (either on behalf of AFF or the Bank) within seconds, providing a near immediate response to the customer.

The customer then purchases goods or services using the POS payment option applicable for that particular merchant location and makes scheduled payments, which can be managed by the customer via phone or online.

Merchant Relationships

AFF believes that its highly customizable LTO, RISA and loan products offer significant value to merchant partners.

AFF’s products can help drive further sales for these merchants by helping these merchants reach credit-constrained customers through the offer of AFF’s financing solutions.

AFF believes that its highly customizable LTO, RISA and bank loan products offer significant value to merchant partners.

AFF’s products can help drive further sales for these merchants by helping them reach credit-constrained customers through the offer of AFF’s financing solutions.

AFF also constantly monitors consumer preferences and trends to ensure that the solutions offered through their merchant partners are aligned with the needs of the merchant partner and its customers.

AFF markets to new merchants through various channels including field sales representatives, national sales, independent sales representatives, buying groups, AFF’s website and strategic integrations via waterfall lending platforms.

AFF takes great care in adding quality merchant partners that meet AFF’s high standards.

To assure this quality, each prospective merchant goes through a rigorous vetting and approval process.

Once a merchant partner is approved, they must sign a merchant agreement that identifies the roles and responsibilities of both the merchant and AFF.

To ensure merchant quality, each prospective merchant goes through a vetting and approval process and, once approved, they must sign a merchant agreement that identifies the roles and responsibilities of both the merchant and AFF.

Merchants also receive appropriate training so they can properly represent AFF’s retail POS payment solutions to their customers and ensure regulatory compliance.

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Merchant partners are subject to suspension and/or termination if, based upon the results of AFF’s monitoring, they are found to be out of compliance with the merchant agreement, have low lease or loan quality performance, have elevated customer complaint volume or fail to comply with applicable law.

AFF currently has a large network of over 6,500 active retail merchant partner stores and e-commerce platforms offering its leasing and financing products.

AFF currently has a large network of over 9,200 active retail merchant partner locations and e-commerce platforms offering its leasing and financing products.

Those merchant partners offer a wide array of goods and services spanning 26 vertical channels.

The following table shows the percentage of AFF's pro forma 2021 originations attributable to these vertical channels:

The following table shows the percentage of AFF's 2022 originations attributable to these certain vertical channels:

Year Ended December 31, 2022

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While this concentration has provided AFF with opportunities for growth, the increasing size and importance of individual merchant partners creates a certain degree of exposure to potential transaction volume loss.

On a pro forma basis, after giving effect to the AFF Acquisition as if it had closed on January 1, 2021, AFF’s top five merchant partners accounted for an aggregate of 16% of combined pro forma 2021 revenues.

AFF’s top five merchant partners accounted for an aggregate of 5% of consolidated 2022 revenues.

For a discussion of the risks associated with the possible loss of one of AFF’s top merchant partners or a significant reduction in transaction volumes with one of its top merchant partners, refer to “Item 1A.

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Thus, AFF generally achieves more operating leverage as transaction volume grows.

Additionally, AFF does not have any of the costs associated with operating physical stores, the personnel needed to operate physical store locations, or any of the costs associated with buying, storing and shipping inventory.

Additionally, AFF does not have any of the costs associated with operating physical retail stores, the personnel needed to operate physical store locations, or any of the costs associated with buying, storing and shipping inventory.

AFF’s business strategy is to continue building market share through additional expansion of both its brick-and-mortar and online merchant base, while increasing customer utilization rates by continuous improvement and enhancement of its omni-channel user experience.

AFF continues to expand on its digital marketing and search engine optimization strategies to harvest more consumer searches and to drive quality repeat customers back to its merchant partners.

AFF continues to expand its digital marketing and search engine optimization strategies to harvest more consumer searches and to drive quality repeat customers back to its merchant partners.

With an ongoing focus toward improving application conversion rates combined with an enhanced risk segmentation of its applications, AFF believes that it has numerous opportunities to gain additional market share and expand its large and fast-growing merchant and customer base to achieve greater levels of revenue and profitability.

Expand Utilization with Existing Merchant Partners and Customers

AFF strives to be the preferred provider of retail POS payment solutions in all of its merchant partner locations.

AFF will continue to promote and build relationships with existing customers and merchants and believes there is an opportunity to increase the share of existing merchants’ overall transaction volumes.

AFF has made, and intends to continue to make, investments in its marketing team to drive awareness of AFF’s products at its merchant partners to increase utilization and encourage repeat business through increased marketing directly to AFF’s customers.

Pursue New Merchant Partners

AFF believes there are many more untapped traditional and e-commerce merchants providing goods and services to customers that could benefit from offering AFF’s retail POS payment solutions.

Utilizing its dedicated national, regional and local sales teams, AFF will continue to pursue and add new merchant partners.

Increase E-Commerce Transaction Volume

AFF currently derives the majority of its transaction volume through traditional brick-and-mortar retail partners.

With the continued growth of e-commerce, AFF believes there is significant opportunity to grow transaction volume through increased e-commerce penetration, both at existing e-commerce merchant partners and with new e-commerce merchants.

AFF believes its customizable decisioning platform and customer experience is highly scalable for e-commerce retailers and provides these retailers with compelling financing solutions for credit-constrained consumers.

AFF has made, and intends to continue to make, investments in its sales team to help capture these e-commerce opportunities.

Continue Enhancement of Proprietary Decisioning Platform

AFF employs a dedicated data science team to develop, monitor and effectively manage its proprietary data analytics and decisioning platform.

As it continues to generate originations, the transaction volume is expected to increase AFF’s internal customer and transactional data set available for analysis, thereby improving the effectiveness of AFF’s decisioning model.

As its dedicated data science team continues to further analyze both internal and external data, the Company believes there is room for continued improvement to the decisioning model that would allow for a greater percentage of applicants being approved, thereby increasing originations, while also becoming more effective in predicting the ability of its applicants to repay their lease, RISA or loan, thereby reducing charge-offs.

Retail POS Payment Solutions Competitive Environment

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The Company cannot be certain that the steps it has taken or will take in the future will prevent misappropriations of its technology or intellectual property rights.

Environmental, Social and Governance (ESG)

Pawnshops are neighborhood-based stores which contribute to the modern “circular economy.” Each of the Company’s 2,825 pawn locations provide a quick and convenient source of small, non-recourse pawn loans and a neighborhood-based market for consumers to buy and resell pre-owned and popular consumer products in a safe environment.

The Company is committed to environmental sustainability, providing customers with rapid access to capital and operating its business in a manner that results in a positive impact on its employees, communities and the environment.

Environmental, Social and Governance (ESG) Overview

Pawnshops are neighborhood-based stores which contribute to the modern “circular economy.” Each of the Company’s 2,872 pawn locations provide access to a quick and convenient source of short-term cash through its non-recourse pawn loans, and is a neighborhood-based market for consumers to buy and resell pre-owned and popular consumer products in a safe environment.

Through AFF, the Company provides point-of-sale payment solutions through technology-enabled virtual LTO and consumer finance platforms with minimal environmental impact.

The Company provides its customers with rapid access to capital while operating its business in a manner that results in a positive impact on its employees, communities and the environment.

Environmental Sustainability

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In effect, the Company operates a large consumer product recycling business by acquiring pre-owned items, including unwanted or unneeded jewelry, electronics, tools, appliances, sporting goods and musical instruments from individual customers and resells them to other customers desiring such products within the same neighborhood.

By being a large reseller of pre-owned items, the Company believes it extends the life of these products and helps reduce demand for newly manufactured and distributed products, thereby reducing carbon emissions and water usage, resulting in a positive impact to the environment.

The Company estimates that it resold approximately 11 million used or pre-owned consumer product items in its pawn stores during 2021, with a commercial value of approximately $1.1 billion.

As a large and significant acquirer and reseller of pre-owned items, the Company believes it extends the life of these products and helps reduce demand for newly manufactured and distributed products, thereby reducing carbon emissions and water usage, resulting in a positive impact to the environment.

The Company estimates that it resold approximately 12 million individual used or pre-owned consumer product items in its pawn stores during 2022, with a commercial value of approximately $1.3 billion.

In addition, the Company recycles significant volumes of precious metals and diamonds whereby unwanted or broken jewelry is collected and melted/processed by the Company and then resold as a commodity for future commercial use.

During 2021, the Company estimates that it recycled over 38,000 ounces of gold and over 19,000 carats of diamonds with a combined market value of approximately $57.2 million.

During 2022, the Company estimates that it recycled over 48,000 ounces of gold and approximately 40,000 carats of diamonds with a combined market value of over $100 million.

This process helps reduce demand for mined precious metals and diamonds, thereby reducing carbon emissions and water usage.

Unlike most brick-and-mortar or online retailers, the Company does not rely on supply chains or manufacturing of its inventories, as it sources the majority of its inventory from forfeited pawn loan collateral and merchandise purchased directly from customers.

Accordingly, the Company does not own, operate or contract for any manufacturing, supply chain, warehousing or distribution facilities to support its pawn operations.

Almost all retail sales and pawn loans are made to customers who live or work within a tight geographic radius of the Company’s stores, and only a very small percentage of sales require delivery service.

Accordingly, the Company does not own, operate or contract for manufacturing, supply chain, warehousing or distribution facilities to support its pawn operations.

Almost all retail sales and pawn loans are made to customers who live or work within a tight geographic radius of the Company’s stores.

The Company does not own, lease or operate any long-haul trucks to support its 2,872 pawn locations and, other than operating small storefront locations which are typically 5,000 square feet or less, the Company’s operations leave a limited carbon footprint compared to manufacturers and retailers selling new merchandise with extensive supply chain and distribution channels.

The Company is working to further reduce energy consumption by retrofitting buildings with LED lighting and reducing corporate travel by utilizing remote work and meeting technologies.

Pawn Loans Offer Safe Lending Solutions in Underserved Communities

Pawn Stores Offer Safe Lending Solutions in Underserved Communities

It is estimated by multiple studies and surveys that approximately 25% of U.S.

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Traditional lenders such as banks, credit unions, credit card providers or other small loan providers do not efficiently or effectively offer micro credit products of this size.

Obtaining a pawn loan is simple, requiring only a valid government ID and an item of personal property owned by the customer.

Applying for a pawn loan is simple, requiring only a valid government ID and an item of personal property owned by the customer.

The Company does not investigate the creditworthiness of a pawn customer, nor does it matter if the customer has defaulted on a previous pawn loan with the Company.

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The process of obtaining a pawn loan is extremely fast, generally taking 15 minutes or less.

Loans are funded immediately by giving customers cash.

Pawn loans are highly transparent and responsible products.

They are regulated, safe and affordable non-recourse loans for which the customer has no legal obligation to repay.

All terms are provided in short, easy to read contracts that allow the Company’s customers to make well-informed decisions before taking out a loan.

Loans are funded immediately by providing customers cash.

Pawn loans include loan terms that are highly transparent and easy to understand.

These fiscally responsible products are regulated, safe and affordable non-recourse loans for which the customer has no legal obligation to repay.

All terms are provided in short, easy-to-read contracts that allow the Company’s customers to make well-informed decisions before obtaining a loan.

Pawn loans differ from most other forms of small-dollar lending because the Company does not engage in any post-default collection efforts on delinquent loans, does not take legal actions against its customers for defaulted loans, does not ban its customers for nonpayment, nor does it issue any negative credit information to external credit agencies but rather, relies only on the resale of the pawn collateral for recovery.

POS Payment Solutions Products Provide Technology Driven Solutions with Low Environmental Impact.

AFF utilizes a paperless online application process for its LTO, RISA or bank loan products.

Applicants can apply for AFF products via text-2-apply, QR codes, web applications on merchant websites, merchant portal applications, in-cart plug-in experiences and third-party waterfall applications.

Upon submission of an application, AFF’s platform typically communicates a decision (either on behalf of AFF or the Bank) electronically within seconds, providing a near immediate response to the applicant.

Upon approval, the applicant then electronically signs their agreement, officially becoming a customer of AFF, and completes their purchase of goods or services using the POS payment option applicable for that particular merchant location.

Customers can begin making scheduled payments, which can be managed by the customer via phone or online.

Most other customer communications are handled by phone, online or electronic communications as well.

The virtual nature of AFF’s business model means it operates no retail or consumer facing facilities and has a limited administrative facilities footprint of less than 46,000 square feet.

Focus on Social and Corporate Responsibility

The Company promotes a strong corporate culture which emphasizes ethics, accountability and treating customers fairly.

This culture is supported by a governance framework with board level oversight of the Company's compliance and internal audit functions and includes the following:

• The Company’s lending operations are licensed and supervised in every jurisdiction in which the Company operates, and it is subject to regular regulatory exams in almost all of these jurisdictions.

• The Company’s pawn and POS payment solutions operations are licensed and supervised in every jurisdiction in which the Company operates and it is subject to regular regulatory exams in almost all of these jurisdictions.

• A formal compliance management system is maintained by the Company in all markets in which it operates.

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• Strict data privacy and protection policies are maintained for personal information of customers and employees.

Focus on Social and Corporate Responsibility

The Company has significant operations in Mexico, where the majority of its employees and customers reside.

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The workforce of the Company’s pawn business is composed primarily of employees who work on an hourly basis.

The AFF business also relies on customer service personnel that are also primarily hourly employees.

The AFF business also relies on customer service personnel that are primarily hourly employees.

In order to increase retention among its hourly employees, the Company is focused on providing competitive and attractive wages and benefits, which includes a store-level profit-sharing program for its pawn store employees and extensive training and advancement opportunities as well as fostering a diverse, safe, healthy and secure workplace.

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All applicants and employees are treated with the same high level of respect regardless of their gender, ethnicity, religion, national origin, age, marital status, political affiliation, sexual orientation, gender identity, disability or protected veteran status.

The Company maintains a whistleblower hotline available to all employees and external stakeholders to report (anonymously if desired) any matter of concern.

The communications hotline is managed by an independent third party and such communications are routed to appropriate functions such as Human Resources, Legal or Compliance.

All communications made to the whistleblower hotline are reported to the Board of Directors of the Company (the “Board”) for review and further investigation, if warranted.

Employee Development and Career Opportunities

The Company believes in attracting top talent with a competitive wage and benefits offering and retaining them by providing an environment where employees can see that their career has a clear path of growth.

To help facilitate that growth, the Company provides tools, resources and programs that adapt and grow with its team members.

These efforts include:

• Providing all store support team members and all management across the Company access to a library of third-party courses enabling the development of new skills that contribute to career growth and development.

• Delivering an in-house designed continuous learning program to avail store team members a career path with the destination of their choosing while using custom learning solutions designed to add and confirm both competencies and proficiencies throughout all levels of their career.

The learning takes a blended approach involving formal courses, self-directed learning and on-the-job applications.

• Coordinating and enrolling training at least annually to all of the Company’s management-level team members, including compliance, ethics and leadership training.

• Providing team members with recurring training on critical issues such as safety and security, compliance, ethics and integrity, and information security.

• Offering a tuition reimbursement program to U.S.

employees that provides eligible team members up to $2,000 per year for courses related to current or future roles at the Company and also discounted tuition rates to select universities.

• Offering all U.S.

eligible employees health insurance benefits and a comprehensive suite of well-being offerings, including unlimited health coaching sessions, unlimited financial coaching sessions with a certified financial planner and counseling/emotional support through the Company’s Employee Assistance program.

• Almost all employees in Latin American are provided statutorily required public healthcare and other statutory benefits.

In Mexico, the Company’s largest Latin American market, most management-level employees and tenured store and administrative employees are provided private healthcare insurance.

All Mexico employees also participate in a statutory profit sharing program.

• Matching team members’ 401(k) plan contributions on eligible pay after one year of service.

• Offering access to thousands of partner discounts for services and products through the partner portal.

• Offering a “work now - paid tomorrow” program through the Earned Wage Access Program.

Employee Profile and Diversity

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For example, the majority of the Company’s front-line, store-based employees participate in a non-qualified profit sharing program which pays up to 8% of the gross profit an employee personally produced through assigned customer service activities.

The Company also provides its employees with extensive training and advancement opportunities, demonstrated by its long history of employee advancement and promotion from within the organization.

The Company maintains robust consumer compliance, anti-money laundering and anti-bribery training programs and requires its managers to adhere to a labor compliance program that meets or exceeds the standards established for coercion and harassment, discrimination and restrictions to freedom of association.

The Company’s locations provide a safe, comfortable and healthy work environment and maintain compliance with all occupational safety, wage and hour laws and other workplace regulations.

Health and Safety

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In addition, during the pandemic, the Company has prioritized the welfare of its employees by maintaining their paid employment status.

To date, no employees in the U.S.

or Mexico markets have been terminated, laid off or furloughed without pay as a direct result of the pandemic.

The Board and the Nominating and Corporate Governance Committee of the Board routinely assess the composition and size of the Board and aim to strike a balance between the knowledge and understanding of the business that comes from longer-term service on the Board and the fresh ideas and perspective that can come from adding new members.

As part of this assessment, the Board and the Nominating and Corporate Governance Committee take diversity-related considerations into account and seek a board that includes directors from diverse professional and personal backgrounds with a broad spectrum of experience and expertise and a reputation for integrity.

The Board considers gender, race, nationality, language skills and other personal characteristics in this process and the extent to which the Board reflect the gender, racial, ethnic and global diversity of the Company’s stockholders, employees and customers.

In part as a result of these assessments, the Board has added three new directors since 2021, including two female directors, one of whom is racially diverse.

Governmental Regulation

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These statutes and regulations prescribe, among other things, the general terms of the Company’s pawn loan agreements, including maximum service fees and/or interest rates that may be charged and collected and mandatory consumer disclosures, as well as maximum interest rates/finance charges or leasing fees (as applicable), consumer disclosures, contractual terms and other matters directly related to the Company’s retail POS payments solutions platform activities.

The Company is also required to obtain and maintain regulatory licenses and comply with regular or frequent regulatory reporting and registration requirements.

The Company is also required to obtain and maintain regulatory licenses and comply with periodic regulatory reporting and registration requirements.

In general, the regulatory regimes to which the Company are subject are increasingly focused on consumer finance companies serving credit-constrained customers and any of these agencies or authorities may propose and adopt new regulations, or interpret existing regulations, in a manner that could result in significant adverse changes in the regulatory landscape for businesses such as the Company’s.

In addition, the current presidential administration has taken a more aggressive enforcement stance against consumer finance companies serving credit-constrained customers like the Company.

In addition, the current presidential administration in the U.S.

has taken a more aggressive enforcement stance against consumer finance companies serving credit-constrained customers like the Company.

For a discussion of the risks related to the Company’s regulatory environment, see “Item 1A.

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government and its agencies have significant regulatory authority over the Company’s activities and its business is subject to a variety of federal laws, including but not limited to the following:

Federal Trade Commission (“FTC”) Act and Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) - The FTC and the Consumer Financial Protection Bureau (the “CFPB”), regulate advertising, marketing of and practices related to financial products and services.

Federal Trade Commission (“FTC”) Act and Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) - The FTC and the CFPB regulate advertising, marketing of and practices related to financial products and services.

The FTC is charged with preventing, investigating and remediating unfair or deceptive acts or practices and false or misleading advertisements, and the CFPB is charged with preventing unfair, deceptive or abusive acts or practices.

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In these proceedings, the CFPB can seek consent orders, confidential memorandums of understandings, cease and desist orders (which can include orders for redisclosure, restitution or rescission of contracts, as well as affirmative or injunctive relief) and monetary penalties.

The Company was recently named as a defendant in a lawsuit brought by the CFPB alleging violations of the Military Lending Act (“MLA”) as discussed elsewhere herein.

On November 12, 2021, the Company was named as a defendant in a lawsuit brought by the CFPB alleging violations of the Military Lending Act (“MLA”) as discussed elsewhere herein.

For a discussion of the risks to the Company’s business related to CFPB regulation, see “Item 1A.

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The SDL Rule also defines some of the RISA transactions that AFF purchases and some of the installment loans that AFF sub-services as loans covered under the rule.

On October 19, 2022, the Fifth Circuit Court of Appeals invalidated the SDL Rule, and the CFPB then filed a petition for a writ of certiorari with the Supreme Court, asking the Supreme Court to uphold the SDL Rule.

The petition is currently pending.

Equal Credit Opportunity Act (“ECOA”) - The ECOA and its implementing Regulation, Regulation B, is a consumer protection law intended to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, or other prohibited bases, and to prevent discrimination on the basis of any of those factors in any aspect of a credit transaction.

The ECOA also imposes certain disclosure obligations with respect to action taken on an application for credit, and is applicable to the Company’s RISA and bank loan products.

Electronic Fund Transfer Act (“EFTA ”) - The EFTA and its implementing Regulation, Regulation E, is a consumer protection law affecting electronic fund transfers, including one-time and recurring preauthorized transactions.

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The MLA also requires certain disclosures and prohibits certain terms, such as mandatory arbitration, if a dispute arises concerning the consumer credit product.

The MLA covers overdraft lines of credit, pawn loans and certain vehicle-secured and unsecured credit products and restricts the Company’s ability to offer its products to military personnel and their dependents to the extent any such products

have a MAPR greater than 36% .

The MLA covers overdraft lines of credit, pawn loans, RISAs, bank installment loans, and certain vehicle-secured and unsecured credit products and restricts the Company’s ability to offer its products to military personnel and their dependents to the extent any such products have a MAPR greater than 36% .

Failure to comply with the MLA may limit the Company’s ability to collect principal, interest, and fees from borrowers and may result in civil and criminal liability that could harm its business.

Compliance with the MLA is complex, increases compliance risks and related costs and limits the potential customer base of the Company.

The Company was recently named as a defendant in a lawsuit brought by the CFPB alleging violations of the MLA as discussed elsewhere herein.

The Company was named as a defendant in a lawsuit brought by the CFPB alleging violations of the MLA as discussed elsewhere herein.

Servicemembers Civil Relief Act (“SCRA”) - The federal SCRA and similar state laws apply to certain transactions between the Company and servicemembers called to active duty in the United States military as defined within the SCRA, and may include reservists and members of the National Guard.

The SCRA limits the rate of interest a covered servicemember may be charged, including certain fees, as well as the actions that can be taken while the consumer is a covered servicemember, including limitations on the ability to maintain legal action and obtain default judgments.

Truth in Lending Act (“TILA”) - TILA and its implementing regulations known as Regulation Z require creditors to deliver disclosures to borrowers during the life cycle of a loan, including when publishing certain advertisements, at application, at account opening and at consummation.

Truth in Lending Act (“TILA”) - TILA and its implementing regulations known as Regulation Z require creditors to deliver disclosures to borrowers during the life cycle of a loan or RISA, including when publishing certain advertisements, at application, at account opening and at consummation.

The requirements may vary based upon product type (e.g., open-end versus closed-end credit products), as well as the timing and nature of certain events (e.g., post-consummation events).

These disclosures include, among other things, the total amount of the finance charges and annualized percentage rate.

These disclosures include, among other things, the total amount of the finance charges and annual percentage rate.

Anti-money laundering and economic sanctions - The Company is subject to certain provisions of the USA PATRIOT Act and the Bank Secrecy Act under which it must maintain an anti-money laundering compliance program covering certain of its business activities.

Gramm-Leach-Bliley Act (“GLBA”) - The Company is subject to various federal and state laws and regulations relating to privacy and security of consumers’ nonpublic personal information.

Gramm-Leach-Bliley Act (“GLBA”) - The Company’s credit products are subject to various federal and state laws and regulations relating to privacy and security of consumers’ nonpublic personal information.

Under these laws, including the GLBA and Regulation P promulgated thereunder, the Company must disclose its privacy policy and practices, including those policies relating to the sharing of nonpublic personal information with third parties.

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The GLBA and other laws also require the Company to safeguard personal information.

The FTC regulates the safeguarding requirements of the GLBA for non-bank lenders through its Safeguard Rules.

The FTC regulates the safeguarding requirements of the GLBA for non-bank lenders through its Safeguard Rules and recently amended the Safeguards Rules, which are currently scheduled to become effective on June 9, 2023, and with which the Company is required to comply.

Fair Credit Reporting Act (“FCRA”) - The Company is subject to the FCRA and its implementing regulation known as Regulation V, as both a user of consumer reports and a furnisher of consumer credit information to credit reporting agencies.

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In addition, the Company must also comply with various state law provisions and the regulations of the U.S.

Department of Justice-Bureau of Alcohol, Tobacco and Firearms that require each pawn lending location dealing in guns to obtain a Federal Firearm License (“FFL”) and maintain a permanent record of all receipts and dispositions of firearms.

Telephone Consumer Protection Act - The Company is also subject to the Telephone Consumer Protection Act and its implementing regulations (together, the “TCPA”) and the regulations of the Federal Communications Commission.

Department of Justice-Bureau of Alcohol, Tobacco and

Firearms that require each pawn lending location dealing in guns to obtain a Federal Firearm License (“FFL”) and maintain a permanent record of all receipts and dispositions of firearms.

Telephone Consumer Protection Act - The Company is subject to the Telephone Consumer Protection Act and its implementing regulations (together, the “TCPA”) and the regulations of the Federal Communications Commission.

The TCPA regulates the delivery of live and prerecorded telemarketing calls, non-marketing calls to cell phones through the use of an automated telephone dialing system, fax advertisements and text messages.

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The TCPA also established a federal do-not-call registry with the Telemarketing Sales Rule.

The Company maintains policies and procedures reasonably designed to comply with the TCPA.

The number of lawsuits related to alleged violations of the TCPA have increased significantly in the U.S.

in recent years.

While the Company maintains policies and procedures reasonably designed to comply with the TCPA, the Company has been subject, and may continue to be subject, to legal actions alleging violations of the TCPA.

While the Company believes such actions have been without merit, there is no guarantee that an adverse outcome in such matters would not have an adverse impact on the Company.

State and Local Regulations

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Additionally, these statutes and regulations in various jurisdictions restrict or prohibit the Company from transferring and/or relocating its pawn licenses and restrict or prohibit the issuance of new licenses.

Many of the Company’s pawn locations are also subject to local ordinances that require, among other things, local permits, licenses, record keeping requirements and procedures, reporting of daily transactions, and adherence to local law enforcement “do-not-buy-lists” by checking law enforcement created databases.

AFF Business - In addition to federal regulatory oversight, currently, nearly every state specifically regulates LTO transactions via state statutes and regulations.

This includes states in which the POS payments platform operates through existing merchant partners.

This includes states in which AFF operates through existing merchant partners.

The scope of state LTO regulation, including permissible rental rates, fees and terms, varies from state to state.

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Most state LTO laws require LTO companies to disclose to their customers the total number of payments, total amount and timing of all payments to acquire ownership of an item, any other charges that may be imposed and miscellaneous other items.

The more restrictive state LTO laws limit the retail price for an item, limit the total cost of ownership that a customer may be required to pay to obtain ownership of an item, or regulate the "cost-of-rental" amount that lease-to-own companies may charge on lease-to-own transactions, generally defining "cost-of-rental" as lease fees paid in excess of the "retail" price of the goods.

The more restrictive state LTO laws limit the retail price for an item, limit the total cost of ownership that a customer may be required to pay to obtain ownership of an item, and/or regulate the "cost-of-rental" amount that LTO companies may charge on LTO transactions, generally defining "cost-of-rental" as lease fees paid in excess of the "retail" price of the goods.

Where licensing or registration is required, the Company is subject to extensive state rules, licensing and examination.

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Failure to comply with these requirements may result in, among other things, refunds of excess charges, monetary penalties, revocation of required licenses, voiding of RISA transactions and other administrative enforcement actions.

With respect to AFF’s servicing of the Bank’s loans in which AFF holds an interest in the receivables, certain state statutes and regulations require that AFF maintain certain licenses and provide periodic reporting of activities related to that servicing activity.

As a result of such licensure, AFF may also be subject to periodic supervisory examination by the applicable state regulator to review AFF’s business activities during the servicing process for compliance with applicable state laws.

Failure to maintain required licenses or act in compliance with applicable law may result in adverse findings, including potential enforcement, as well as refunds of excess charges, monetary penalties, revocation of licenses, and other administrative or enforcement actions.

In addition, from time to time, state regulatory agencies and state attorneys general have directed investigations or regulatory initiatives toward the Company’s industry, or toward certain companies within the industry.

For example, on January 6, 2022, AFF received a subpoena from the New Jersey Attorney General’s office requesting information related to AFF’s partnership with the Bank and the bank loans with New Jersey consumers that AFF sub-services.

AFF is in the process of providing the requested documents.

Mexico Regulations

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FirstCash Website

The Company’s primary websites are www.firstcash.com and www.americanfirstfinance.com .

The Company’s primary corporate website is www.firstcash.com .

The Company makes available, free of charge, at its corporate website, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after they are electronically filed with the Securities and Exchange Commission (“SEC”).

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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 1. Business