Item 8.01 Other Events.
As previously disclosed, most recently in its quarterly report on Form 10-Q for the quarter ended September 30, 2022, as part of its restructuring plan, the Company is scaling down origination of automobile finance installment contracts and is no longer originating direct consumer loans. Consistent with this significant reduction in footprint, the Company has reduced its workforce to 18 employees as of January 18, 2023.
As previously disclosed, the Company anticipates that execution of its evolving restructuring plan will free up capital and permit the Company to allocate excess capital to increase shareholder returns, whether by acquiring loan portfolios or businesses or by investing
outside of the Company’s traditional business. The Company expects that the refinancing reported above reduces the limitations on use of its capital. However, the overall timeframe and structure of the Company’s restructuring remains uncertain.
Cautionary Statement on Forward-Looking Information
This Current Report on Form 8-K contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on management’s current beliefs and assumptions, as well as information currently available to management. When used in this document, the words “anticipate”, “estimate”, “expect”, “will”, “may”, “plan,” “believe”, “intend” and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected or implied in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. As a result, actual results could differ materially from those indicated in these forward-looking statements. Forward-looking statements in this Current Report include, without limitation, statements about (1) the expected benefits, costs and timing of the Company’s restructuring and change in operating strategy; (2) the availability and use of excess capital (including by acquiring loan portfolios or businesses or by investing outside of the Company’s traditional business); and (3) limitations on the use of capital. These statements are subject to certain risks, uncertainties and assumptions that may cause results to differ materially from those expressed or implied in forward-looking statements, including without limitation:
• the risk that the anticipated benefits of the restructuring and change in operating strategy, including the servicing and financing arrangements with Westlake (including without limitation the expected reduction in overhead, streamlining of operations or reduction in compliance risk), do not materialize to the extent expected or at all, or do not materialize within the timeframe targeted by management;
• the risk that the actual servicing fees paid by the Company under the Westlake servicing agreement, which the Company expects to classify as administrative costs on its financial statements, exceed the amounts estimated;
• the risk that the actual interest payments made by the Company under the Loan Agreement exceed the range estimated;
• the risk that the actual costs of the exit and disposal activities in connection with the consolidation of workforce and closure of offices exceed the Company’s estimates or that such activities are not completed on a timely basis;
• the risk that the Company underestimates the staffing and other resources needed to operate effectively after consolidating its workforce and closing offices;
• uncertainties surrounding the Company’s success in developing and executing on a new business plan; and
• uncertainties surrounding the Company’s ability to use any excess capital to increase shareholder returns, including without limitation, by acquiring loan portfolios or businesses or investing outside of the Company’s traditional business; and
•the risk factors discussed under “Item 1A – Risk Factors” in our Annual Report on Form 10-K, and our other filings made with the U.S. Securities and Exchange Commission (“SEC”).
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. All forward-looking statements included in this Current Report are based on information available to the Company as the date of filing of this Current Report, and the Company assumes no obligation to update any such forward-looking statement. Prospective investors should also consult the risk factors described from time to time in the Company’s other filings made with the SEC, including its reports on Forms 10-K, 10-Q, 8-K and annual reports to shareholders.