Risk Factors Update Summary

• The company may experience higher defaults or customer acquisition costs due to the non-prime nature of many customers. This could result in increased delinquency rates and losses, negatively impacting operating results.
• The company determined it is appropriate to impair the goodwill associated with its U.S. Direct Lending and Canada POS Lending businesses due to macroeconomic conditions and current earnings outlook. This change might result in significant impairment losses in the future.
• The 2017 Final CFPB Payday Rule is currently stayed due to a legal challenge, and the Supreme Court will hear oral arguments in October 2023. This could have a significant adverse impact on our business.
• The company's recent growth and expansion through acquisitions may result in challenges in integrating newly acquired businesses and achieving expected cost-saving synergies. Failure to do so could adversely affect financial condition and results of operations.
• Flexiti has substantial merchant partner concentration, with two merchant partners accounting for 35% and 18% of its total point-of-sale lending originations in 2022. The concentration of revenues with limited merchant partners poses inherent risks to the company's financial position and operations.
• The outcome of a CFPB investigation into certain business practices of Heights Finance, a company acquired by CURO, is uncertain and may materially affect Heights Finance's business and the combined business.
• The company's credit agreements contain covenants that may restrict its flexibility and require compliance with certain financial ratios, including leverage and interest coverage ratios. Failure to comply with these covenants could have a material adverse effect on the company's financial condition and operations.
• Our use of third-party vendors is subject to increased regulatory review and oversight, which may require more management involvement and decrease the benefits of using them. Failure to meet oversight standards could result in enforcement actions or penalties.
• The company's adoption of the current expected credit loss (CECL) accounting standard may result in an estimated increase of approximately $135 million to the allowance for credit losses, affecting future provision for credit losses.
• The company is exposed to interest rate risk resulting from general economic conditions and policies of various governmental and regulatory agencies. Rising interest rates may increase the company's cost of capital, impacting its operating costs and margins.
• Changes in laws and regulations, such as restrictions on lead aggregators or providers, could affect our ability to use them as a source for applicants, impacting our business.
• The company's controls and procedures may fail or be circumvented, which could result in a material misstatement of financial statements or non-compliance with regulations. Failure or circumvention of controls and procedures could have a material adverse effect on the company's business and financial condition.
• The nomination of Rohit Chopra as the CFPB's next director could have a material adverse effect on our business, reputation, financial condition, and results of operations.
• Disruptions and volatility in capital markets may negatively impact the company's ability to meet debt obligations, refinance debt, or access capital markets in the future.
• Our insurance operations are subject to various risks, including changes in laws and regulations, claims experience, and insurance carrier relationships. Decreased demand for credit insurance products could adversely impact our income.
• The company faces strong competition in the consumer finance industry, which may have a material adverse effect on financial condition and results of operations.
• The company relies on third-party lenders, CSO programs, and SPV facilities for funding its customer loans. Any disruption in funding sources could substantially decrease the company's revenue and earnings.
• Our arbitration provisions in customer loan agreements may be subject to legal challenges, and court decisions have concluded that class action waivers may be unenforceable. This could impact our results of operations or financial condition.
• The company's growth strategy through acquisitions carries risks, including potential loss of significant customers or key personnel, failure to obtain expected benefits, and increased debt or dilution of equity securities.
• The company shares confidential customer information and proprietary information with vendors and service providers, which may expose it to cybersecurity risks and potential breaches. Breaches could result in financial loss, litigation exposure, and damage to the company's reputation.
• The reduced value of equity awards under our 2017 Incentive Plan could be a factor in causing senior executives to leave the company, potentially affecting our business and growth strategies.