~~Changes in tax laws could adversely affect our business.~~

On December 22, 2017, the U.S. President signed into law H.R. 1, commonly referred to as the Tax Cuts and Jobs Act of 2017 (“the TCJA”). The TCJA includes numerous changes in tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%, which took effect for taxable years beginning on or after January 1, 2018, and a territorial international tax system which significantly alters the U.S. federal income tax consequences related to foreign subsidiary income. We continue to examine the impact the TCJA may have on our operations. However, the impact of the TCJA is uncertain and is subject to ongoing guidance and interpretation. See Note 13, “Income Taxes” of our Notes to Consolidated Financial Statements included in this Annual Report.

~~Adverse real estate market conditions or zoning restrictions may result in increased operating costs or a reduction in new store development, which could impact our profitability and growth plans.~~

We lease all of our store locations. An increase in lease costs, property taxes or maintenance costs for lease renewals or new store locations could result in increased operating costs for these locations, thereby negatively impacting the stores’ operating margins.

A recent trend among some municipalities in the United States and in Canada has been to enact zoning restrictions in certain markets. These zoning restrictions may limit the number of payday lending stores that can operate in an area or require certain distance requirements between competitors, residential areas or highways. These restrictions may make it more difficult to find suitable location for future expansion, thereby negatively impacting our growth plans.

~~Failure to keep up with the rapid changes in e-commerce and the uses and regulation of the Internet could harm our business.~~

The business of providing products and services such as ours over the Internet is dynamic and relatively new. We must keep pace with rapid technological change, consumer use habits, Internet security risks, risks of system failure or inadequacy and governmental regulation and taxation, and each of these factors could adversely impact our business. In addition, concerns about fraud, computer security and privacy and/or other problems may discourage additional consumers from adopting or continuing to use the Internet as a medium of commerce. In countries such as the United States and the United Kingdom, where e-commerce generally has been available for some time and the level of market penetration of our online financial services is relatively high, acquiring new

~~customers for our services may be more difficult and costly than it has been~~CFPB's Final Payday Rule, if implemented in the past. In order to expand our customer base, we must appeal to and acquire consumers who historically have used traditional means of commerce to conduct their financial services transactions. If these consumers prove to be less profitable than our previous customers, and we are unable to gain efficiencies in our operating costs, including our cost of acquiring new customers, our business could be adversely impacted.

~~Competition in the financial services industry could cause us to lose market share and revenues.~~

The industry in which we operate is highly fragmented. While we believe the market for U.S. storefronts is mature, it is likely that competition for market share will intensify. We believe the Canadian market is less saturated, but still experiences significant competition by both large, well-financed operators as well as significant numbers of smaller competitors. We believe that online lending in the United Kingdom is more widely accepted among consumers than in either the United States or in Canada, and that customers are more likely to transact business via the internet and using mobile phones. Across all geographies, we see a growing number of sophisticated online-based lenders. Increased competition in any of the geographies in which we operate could lead to consolidation in our industry. If our competitors get stronger through consolidation, and we are unable to identify attractive consolidation opportunities, we could be at a competitive disadvantage and could experience declining market share and revenue. If these events materialize, theyits current form, could negatively affect our U.S. consumer lending business.

Pursuant to its authority to adopt UDAAP rules, the CFPB issued the 2017 and 2020 Final CFPB Rule, which contained payment restrictions, among other things. The repayment provisions applicable to us include those for longer-term loans with (a) annual percentage rates exceeding 36% and (b) lender access to the consumer’s account, whether by ACH, card payment, check or otherwise. The payment provisions generally prohibit lenders from seeking payment, without explicit reauthorization, when two consecutive payments have failed due to insufficient funds and also require a series of prescribed notices for initial payments, “unusual” payments (by amount, payment date or payment modality) and the triggering of limitations and a consumer rights notice after two consecutive failed payment attempts.

The 2017 Final CFPB Rule was originally scheduled to go into effect by August 2019. However, the Community Financial Services Association and the Consumer Service Alliance of Texas (collectively, the “Trade Groups”), brought a lawsuit (the “Texas Lawsuit”) against the CFPB in a federal district court in Texas. The Texas Lawsuit challenged the 2017 Final CFPB Rule and resulted in a court-ordered stay of the Rule.

In August 2021, following the U.S. District Court’s ruling in favor of the CFPB, the Trade Groups filed a Notice of Appeal with the Fifth Circuit and simultaneously filed a motion to stay the effective compliance date, pending the decision on appeal. On October 14, 2021, the Fifth Circuit granted the compliance stay extension.

On October 19, 2022, the Fifth Circuit, handed down a decision invalidating the payment restrictions of the 2017 and later modified 2020 Final CFPB Rule on the basis that the CFPB’s funding mechanism is unconstitutional. Specifically, the Fifth Circuit ruled that the CFPB’s funding structure violates the Constitution because the CFPB does not receive its funding from annual congressional appropriations, but instead receives funding directly from the Federal Reserve based on a request from the CFPB’s director. Thus, while Congress properly authorized the CFPB to promulgate the 2017 and 2020 Final Rule, the CFPB itself did not have the ability to ~~generate sufficient~~exercise that power via constitutionally appropriated funds. The Fifth Circuit ruled, following this logic, that the appropriate remedy for the resulting harm to the Trade Groups due to this improper use of unappropriated funds in conducting the rulemaking associated with the 2017 and 2020 Final CFPB Rule was to nullify the CFPB’s action. The CFPB has appealed this decision to the Supreme Court, which has agreed to hear oral arguments next term, starting October 2023.

If the payment provisions of the 2017 and 2020 Final CFPB Payday Rule become effective in the current form, we will need to make changes to our payment processes and customer notifications in our U.S. consumer lending business. If we are not able to make all of these changes successfully, the payment provisions of the 2017 and 2020 Final CFPB Payday Rule could have a significant adverse impact on our business, prospects, results of operations, financial condition and cash ~~flow~~flows. Refer to ~~fund our operations~~Business—Regulatory Environment and ~~service our debt obligations.~~Compliance—U.S. Regulations—U.S. Federal Regulations— CFPB Rules."

In addition to increasing competition among companies that offer traditional consumer loan products, there is a risk of losing market share to new market entrants. Increased competition from secured title loan lenders, pawn lenders and unsecured installment loan lenders could also adversely affect our revenues.

Our ~~growth strategy calls for opening additional stores in the United States and Canada, and~~use of third-party vendors is subject to expand our online presence in each of those geographies. If our competitors aggressively pursue store expansion, competition for store sites could result in our failing to open our planned number of stores, or increase our costs to secure additional sites, both of which could result in slower growth and diminished operating performance. Increased competition in our online business could result in higher advertising and marketing costs to attract and retain customers, leading to lower margins.regulatory review.

The ~~international~~CFPB and other regulators have issued regulatory guidance focusing on the need for financial institutions to perform due diligence and ongoing monitoring of third-party vendor relationships, which increases the scope of management involvement and decreases the benefit that we receive from using third-party vendors. Moreover, if our ~~operations leads to increased cost and complexity, which could negatively impact our operations.~~

~~The international nature~~regulators conclude that we have not met the standards for oversight of our operations has increased the complexity of managing our business. This has led to enhanced administrative burdens related to regulatory compliance, tax compliance, labor controls and other federal, state, provincial and local requirements. Additional resources, both internal and external, have been added to comply with these increasing requirements, resulting in an increase in our corporate costs. In addition, it remains to be seen what impact the recent vote by the United Kingdom to leave the European Union will have on the U.K. economy and our U.K. operations. Future changes to laws or regulations may result in further cost increases, thereby negatively impacting our profitability.

~~Our operations~~third-party vendors, we could be subject to ~~natural disasters~~enforcement actions, civil monetary penalties, supervisory orders to cease and ~~other business disruptions, which could adversely impact our future revenue and financial condition and increase our costs and expenses.~~

Our services and operations are vulnerable to damage or interruption from tornadoes, hurricanes, earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors and similar events. A significant natural disaster, such as a tornado, hurricane, earthquake, fire or flood, could have a material adverse impact on our ability to conduct business, and our insurance coverage may be insufficient to compensate for losses that may occur. Acts of terrorism, war, civil unrest, violence or human error could cause disruptions to our business or the economy as a whole. Any of these events could cause consumer confidence to decrease, which could result in a decreased number of loans being made to customers.

~~We rely on trademark protection to distinguish our products from the products of our competitors.~~

We rely on trademark protection to distinguish our products from the products of our competitors. We have registered various trademarks, including “The Money Box,” “Speedy Cash®,” “OPT+SM” and “Rapid Cash,” in the United States and/or Canada, and are in the process of registering other trademarks in those jurisdictions. We registered the "Juo Loans" trademark in the United Kingdom and at the European Union level. For trademarks we use that are not registered, and as permitted by applicable local law, we rely on common law trademark protection. Third parties may oppose our trademark applications, or otherwise challenge our use of the trademarks, and may be able to use our trademarks in jurisdictions where they are not registered or otherwise protected by law. If our trademarks are successfully challenged or if a third party is using confusingly similar or identical trademarks in particular jurisdictions before we do, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote additional resources to marketing new brands. If others are able to use our trademarks, our ability to distinguish our products may be impaired, which could adversely affect our business.

~~We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers.~~

Many of our employees were previously employed at other financial technology companies, including our competitors or potential competitors, and we may hire employees in the future that are so employed. We could in the future be subject to claims that these employees, or we, have inadvertently or otherwise used or disclosed trade secretsdesist or other proprietary information of their former employers. If we fail in defending against such claims, a court could order us to pay substantial damages and prohibit us from using technologies or features that are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. If any of these technologies or features are important to our products, this could prevent us from selling those products and could have a material adverse effect on our business. Even if we are successful in defending against these claims, such litigation could result in substantial costs and divert the attention of management.

~~Risks Relating to Owning Our Common Stock~~

~~An active trading market for our common stock may not develop and the market price for our common stock may decline.~~

~~We cannot predict the extent to~~remedial actions, which investor interest in our company will lead to the development of an active trading market, or how liquid that market may become. An active trading market for our common stock may never develop or be sustained, which could adversely impact your ability to sell your shares and could depress the market price of your shares. Consequently, you may be unable to sell your shares of our common stock at prices equal to or greater than the price you paid for them. We cannot predict the prices at which our common stock will trade.

~~The market price of our common stock is likely to be volatile and could decline, resulting in a substantial loss of your investment.~~

The stock market in general has been highly volatile. As a result, the market price and trading volume for our common stock may also be highly volatile, and investors in our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Factors that could cause the market price of our common stock to fluctuate significantly include:

~~our operating and financial performance and prospects and the performance of other similar companies;~~

~~our quarterly or annual earnings or those of other companies in our industry;~~

~~conditions that impact demand for our products and services;~~

~~the public’s reaction to our press releases, financial guidance and other public announcements, and filings with the SEC;~~

~~changes in earnings estimates or recommendations by securities or research analysts who track our common stock;~~

~~market and industry perception of our level of success in pursuing our growth strategy;~~

~~strategic actions by us or our competitors, such as acquisitions or restructurings;~~

~~changes in government and other regulations;~~

~~changes in accounting standards, policies, guidance, interpretations or principles;~~

~~arrival or departure of members of senior management or other key personnel;~~

~~the number of shares to be publicly traded;~~

~~sales of common stock by us, our investors or members of our management team;~~

~~factors affecting the industry in which we operate, including competition, innovation, regulation, the economy and other factors; and~~

changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, telecommunications failures, cyber-attacks, civil unrest in various parts of the world, acts of war, terrorist attacks or other catastrophic events.

Following periods of volatility in the market price of a company’s securities, stockholders often file securities class action lawsuits against such company. Our involvement in a class action lawsuit could be costly to defend and divert our senior management’s attention and, if adversely determined, could involve substantial damages.

~~If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.~~

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Our common stock does not currently have and may never obtain research coverage by securities and industry analysts. If there is no coverage of us by securities or industry analysts, the trading price for our shares could be negatively impacted. In the event we obtain securities or industry analyst coverage and one or more of these analysts downgrades our shares or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our shares could decrease, which could cause our stock price or trading volume to decline.

We are an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, enacted in April 2012, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies, including, but not limited to, reduced disclosure obligations regarding executive compensation (including Chief Executive Officer pay ratio disclosure) in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Additionally, until we cease to be an emerging growth company, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. As an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

We may take advantage of these exemptions until such time that we are no longer an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues are at least $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if, among other things, the market value of our common equity securities held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in nonconvertible debt securities during the preceding three-year period.

We cannot predict whether investors will find our common stock less attractive if we choose to rely on one or more of the exemptions described above. If investors find our common stock less attractive as a result of any decisions to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”

We have historically operated as a private company and have not been subject to the same financial and other reporting and corporate governance requirements as a public company. We are now required to file annual, quarterly and other reports with the SEC and will need to prepare and timely file financial statements that comply with SEC reporting requirements. We will also be subject to other reporting and corporate governance requirements under the listing standards of The New York Stock Exchange, or NYSE, and the Sarbanes-Oxley Act, which will impose significant compliance costs and obligations upon us. The changes necessitated by becoming a public company will require a significant commitment of additional resources and management oversight, which will increase our operating costs. These changes will also place significant additional demands on our finance and accounting staff, which may not have prior public company experience or experience working for a newly public company, and on our financial accounting and information systems, and we may need to, in the future, hire additional accounting and financial staff with appropriate public company reporting experience and technical accounting knowledge. Other expenses associated with being a public company include increases in auditing, accounting and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses. As a public company, we will be required, among other things, to:

~~prepare and file periodic reports, and distribute other stockholder communications, in compliance with the federal securities laws and the NYSE rules;~~

~~define and expand the roles and the duties of our board of directors and its committees and adopt a set of corporate governance guidelines;~~

maintain a majority independent board of directors and fully independent audit, compensation and nominating and corporate governance committees, in compliance with the federal securities laws and the NYSE rules;

~~institute more comprehensive compliance, investor relations and internal audit functions; and~~

~~evaluate and maintain our system of internal control over financial reporting, and report on management’s assessment thereof, in compliance with rules and regulations of the SEC and PCAOB.~~

In particular, the Sarbanes-Oxley Act will require us to maintain disclosure controls and procedures and report on their effectiveness, and to maintain and document our internal control over financial reporting document and test their effectiveness in accordance with an established internal control framework, and, after our first Annual Report, to report on our conclusions as to the effectiveness of our internal controls. Likewise, once we are no longer an emerging growth company, our independent registered public accounting firm will be required to provide an attestation report on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. As described in the previous risk factor, we expect to qualify as an emerging growth

company and could potentially qualify as an emerging growth company until December 31, 2022. Any failure to implement required new or improved controls, or difficulties encountered in their implementation or in remediating any weaknesses discovered in the internal controls, could harm our operating results, cause us to fail to meet our reporting obligations, or require us to restate our financial statements from prior periods. Any of these could lead investors to lose confidence in the reliability of our financial statements. This could result in a decrease in the value of our common stock. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.

~~We may not pay regular cash dividends on our common stock and, consequently, your ability to achieve a return on your investment may depend on appreciation in the price of our common stock.~~

Any decision to declare and pay dividends will be dependent on a variety of factors, including earnings, cash flow generation, financial position, results of operations, the terms of our indebtedness and other contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. The terms of our indebtedness limit the ability of CFTC to pay dividends to CURO Group Holdings Corp., which would be necessary for us to pay dividends on our common stock. As a result, you should not rely on an investment in our common stock to provide dividend income and the success of an investment in our common stock may depend upon an appreciation in its value.

~~Future offerings of debt or equity securities may rank senior to our common stock and may result in dilution of your investment.~~

If we decide to issue debt securities in the future, which would rank senior to shares of our common stock, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities. We may also issue preferred equity, which will have superior rights relative to our common stock, including with respect to voting and liquidation.

Furthermore, if we raise additional capital by issuing new convertible or equity securities at a lower price than the initial public offering price, your interest will be diluted. This may result in the loss of all or a portion of your investment. If our future access to public markets is limited or our performance decreases, we may need to carry out a private placement or public offering of our common stock at a lower price than the initial public offering price.

Because our decision to issue debt, preferred or other equity or equity-linked securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their shareholdings in us.

~~The market price of our common stock could be negatively affected by future sales of our common stock.~~

If we or our existing stockholders, our directors, their affiliates, or our executive officers, sell, or are perceived as intending to sell, a substantial number of our common stock in the public market, the market price of our common stock could decrease significantly.

We, our executive officers and directors and certain of our significant stockholders have agreed with the underwriters not to dispose of or hedge any of the shares of our common stock or securities convertible into or exchangeable for shares of our common stock during the period from the date of filing our prospectus continuing through the date that is 180 days after the date of the prospectus filing, except with the prior written consent of Credit Suisse Securities (USA) LLC and Jefferies LLC.

These shares of common stock will be freely tradable (subject to certain current public information requirements) after the expiration date of the lock-up agreements, excluding any acquired or held by persons who may be deemed to be our “affiliates” as defined in Rule 144 under the Securities Act, which will continue to be subject to the volume and other restrictions of Rule 144 under the Securities Act. At any time following our IPO, subject,

however, to the 180-day lock-up agreement entered into with the underwriters, the holders of 33,862,572 shares of our common stock are entitled to require that we register their shares under the Securities Act for resale into the public markets. All shares sold pursuant to an offering covered by such registration statement would be freely transferable.

On December 8, 2017, we filed a registration statement on Form S-8 under the Securities Act registering 9,477,480 shares of our common stock reserved for future issuance under our equity incentive plans. Refer to Note 12 - "Shared-Based Compensation" and Note 21 - "Benefit Plans" for additional information concerning our equity incentive plans.

~~Provisions in our charter documents could discourage a takeover that stockholders may consider favorable.~~

Certain provisions in our governing documents could make a merger, tender offer or proxy contest involving us difficult, even if such events would be beneficial to the interests of our stockholders. Among other things, these provisions:

~~permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships;~~

~~authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;~~

~~provide that our board of directors is expressly authorized to amend or repeal any provision of our bylaws;~~

~~restrict the forum for certain litigation against us to Delaware;~~

~~establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings;~~

~~establish a classified board of directors with three staggered classes of directors, where directors may only be removed for cause (unless we de-classify our board of directors);~~

~~require that actions to be taken by our stockholders be taken only at an annual or special meeting of our stockholders, and not by written consent; and~~

~~establish certain limitations on convening special stockholder meetings.~~

These provisions may delay or prevent attempts by our stockholders to replace members of our management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock. We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers or investors aiming to effect changes in management to negotiate with our board of directors and by providing our board of directors with more time to assess any proposal. However, such anti-takeover provisions could also depress the price of our common stock by acting to delay or prevent a change in control of us.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the General Corporation Law of the State of Delaware, our amended and restated certificate of incorporation or our amended and restated bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds

~~favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits.~~

~~The FFL Holders and Founder Holders will together own more than 50% of our common stock, and their interests may conflict with ours or yours in the future.~~

Investment funds associated with the FFL Holders and the Founder Holders beneficially owned approximately 28.67% and 44.81% of our common stock, respectively, as of December 31, 2017, or approximately 28.06% and 43.86%, respectively, after the underwriters exercised in full on January 5, 2018 their option to purchase additional shares. As a result, the FFL Holders and the Founder Holders collectively have the ability to elect all of the members of our board of directors and thereby control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, the incurrence or modification of debt by us, certain amendments to our amended and restated certificate of incorporation and amended and restated bylaws, and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with your interests. In addition, the FFL Holders together with Founder Holders may have an interest in pursuing acquisitions, divestitures and other transactions that, in their respective judgment, could enhance their investment, even though such transactions might involve risks to you. For example, the FFL Holders together with the Founder Holders could cause us to make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets.

The FFL Holders and the Founder Holders have entered into the Amended and Restated Investor Rights Agreement. See Note 15 - “Stockholders' Equity" to our Consolidated Financial Statements in this Annual Report for additional information on the Investor Rights Agreement.

The FFL Holders and their affiliated funds are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.

~~Risks Relating to the Regulation of Our Industry~~

~~The CFPB promulgated new rules applicable to our loans that~~ could have a material adverse effect on our business, reputation, financial condition and results of operations.

~~The CFPB adopted~~ Further, federal and state regulators have scrutinized the practices of lead aggregators and providers. If regulators place restrictions on certain practices by lead aggregators or providers, our ability to use them as a new rule applicable to payday vehicle title, and certain high-cost installment loans in November 2017, which we refer to as the CFPB Rule, with most provisions becoming effective 21 months after this CFPB Rule is published in the Federal Register (August 2019). See “Regulatory Environment and Compliance—U.S. Regulations—U.S. Federal Regulations—CFPB Rule” in Item 1. "Business"source for ~~additional information on the CFPB Rule.~~

This CFPB Rule establishes ability-to-repay, or ATR, requirements for “covered short-term loans,” such as our single-payment loans, and for “covered longer-term balloon-payment loans,” such as our revolving lines of credit, as currently structured. It establishes “penalty fee prevention” provisions that will apply to all of our loans, including our covered short-term loans, covered longer-term balloon-payment loans and our installment loans, which are “covered longer-term loans” under the CFPB Rule.

Covered short-term loans are consumer loans with a term of 45 days or less. Covered longer-term balloon payment loans include consumer loans with a term of more than 45 days where (i) the loan is payable in a single payment, (ii) any payment is more than twice any other payment, or (iii) the loan is a multiple advance loan that may not fully amortize by a specified date and the final paymentapplicants could be ~~more than twice the amount of other minimum payments. Covered longer-term loans are consumer loans with a term of more than 45 days where (i) the total cost of credit exceeds an annual rate of 36%,~~affected.

Our industry is highly regulated. Existing and (ii) the lender obtains a form of “leveraged payment mechanism” giving the lender a right to initiate transfers from the consumer’s account. Post-dated checks, authorizations to initiate ACH paymentsnew laws and ~~authorizations to initiate prepaid or debit card payments are all~~

~~leveraged payment mechanisms under the CFPB Rule. While there are certain coverage exceptions—for example, an exception for typical pawn loans—they do not apply to our loans.~~

The ATR provisions of the CFPB Rule apply to covered short-term loans and covered longer-term balloon-payment loans but not to covered longer term loans. Under these provisions, to make a covered short-term loan or a covered longer-term balloon-payment loan, a lender has two options.

A “full payment test,” under which the lender must make a reasonable determination of the consumer’s ability to repay the loan in full and cover major financial obligations and living expenses over the term of the loan and the succeeding 30 days. Under this test, the lender must take account of the consumer’s basic living expenses and obtain and generally verify evidence of the consumer’s income and major financial obligations.

A “principal-payoff option,” under which the lender may make up to three sequential loans, without engaging in an ATR analysis. The first of these so-called Section 1041.6 Loans in any sequence of Section 1041.6 Loans without a 30-day cooling off period between them is limited to $500, the second is limited to two-thirds of the first and the third is limited to one-third of the first. A lender may not use this option if (1) the consumer had in the past 30 days an outstanding covered short-term loan or an outstanding longer-term balloon-payment loan that is not a Section 1041.6 Loan, or (2) the new Section 1041.6 Loan would result in the consumer having more than six covered short-term loans (including Section 1041.6 Loans) during a consecutive 12-month period or being in debt for more than 90 days on such loans during a consecutive 12-month period. For Section 1041.6 Loans, the lender cannot take vehicle security or structure the loan as open-end credit.

We believe that conducting a comprehensive ATR analysis will be costly and that many of our short-term borrowers will not be able to pass a full payment test. Accordingly, we expect that the full payment test option will have little if any utility for us. The option to make Section 1041.6 Loans using the principal-payoff option may be more viable but the restrictions on these loans under the CFPB Rule will significantly reduce the permitted borrowings by individual consumers. There can be no assurance the ATR provisions will not have an adverse impact on individual customers' ability to borrow and our business.

The CFPB Rule’s penalty fee prevention provisions, which will apply to all covered loans, may have a greater impact on our operations than the ATR provisions of the CFPB Rule. Under these provisions, if two consecutive attempts to collect money from a particular account of the borrower are unsuccessful due to insufficient funds, the lender cannot make any further attempts to collect from such account unless and until it provides notice of the unsuccessful attempts to the borrower and obtains from the borrower a new and specific authorization for additional payment transfers. Obtaining such authorization will be costly and in many cases not possible.

Additionally, the penalty fee prevention provisions will require the lender generally to give the consumer at least three business days advance notice before attempting to collect payment by accessing a consumer’s checking, savings, or prepaid account. These requirements will necessitate revisions to our payment, customer notification, and compliance systems and create delays in initiating automated collection attempts where payments we initiate are initially unsuccessful.

In short, if and when the CFPB Rule goes into effect, the penalty fee prevention provisions will require substantial modifications in our current practices. These modifications would increase costs and reduce revenues. Accordingly, this aspect of the CFPB Ruleregulations could have a ~~substantial~~material adverse ~~impact~~effect on our results of ~~operations. However, as of the date hereof,~~operations or financial condition and failure to comply with these ~~provisions will not become effective before August 2019,~~laws and the CFPB Rule remains subject to potential override by disapproval under the Congressional Review Act. Moreover, the current acting director could suspend, delay, modify or withdraw the CFPB Rule. Further, we expect that important elements of the CFPB Rule will be subject to legal attack, including application of the penalty fee provisions to card payments (where issuing banks do not charge penalty fees on declined transactions). Thus, it is impossible to predict whether and when the CFPB Rule (and the penalty fee provisions) will go into effect and, if so, whether and how it (and they) might be modified. While we will make every effort to be in compliance with the new CFPB

~~Rule by August 2019, we make no assurances that we will be fully compliant by the time the rule becomes effective. See “Business-U.S. Regulations-U.S. Federal Regulations-CFPB Rule.”~~

~~Our industry is strictly regulated everywhere we operate, and these~~ regulations could ~~have an adverse effect on our business~~subject us to various fines, civil penalties and ~~results of operations.~~other relief.

~~We are subject to substantial regulation everywhere we operate.~~ In the ~~United States~~U.S. and Canada, our business is subject to a variety of statutes and regulations enacted ~~by government entities~~ at the federal, state, or provincial and municipal levels. InAccordingly, regulatory requirements, and the ~~United Kingdom,~~actions we ~~are subject~~must take to ~~statutes~~comply with regulations, vary considerably by jurisdiction. Managing this complex regulatory environment requires considerable compliance efforts. It is costly to operate in this environment, and it is possible that those costs will increase materially over time. This complexity also increases the risks that we will fail to comply with regulations ~~enacted by the U.K. government, as well as directly applicable European Union legislation.~~which could have a material adverse effect on our results of operations or financial condition. These regulations affect our business in many ways, and include regulations relating to:

~~the amount we may charge in interest rates and fees;~~

•the terms of ~~our~~ loans (such as ~~maximum and minimum durations),~~interest rates, fees, durations, repayment ~~requirements and limitations, number and frequency of loans,~~terms, maximum loan amounts, renewals and extensions ~~required~~and repayment ~~plans~~plans) and ~~reporting~~the number and ~~use~~frequency of ~~state-wide databases;~~loans;

•underwriting requirements;

•collection and servicing activity, including initiation of payments from consumer accounts;

~~the establishment and operation of credit services organizations or credit access businesses, which we refer to as CSOs and CABs in this Annual Report;~~

•licensing, reporting and document retention;

•unfair, deceptive and abusive acts and ~~practices;~~practices and discrimination;

~~non-discrimination requirements;~~

•disclosures, notices, advertising and marketing;

•loans to members of the military and their dependents;

•insurance products and traditional ancillary products;

•requirements governing electronic payments, transactions, signatures and disclosures;

•check cashing;

•money transmission;

•currency and suspicious activity recording and reporting;

•privacy and use of personally identifiable information and consumer data, including credit reports;

~~anti-money laundering and counter-terrorist financing requirements, including currency and suspicious transaction recording and reporting;~~

•posting of fees and charges; and

•repossession practices in certain jurisdictions where we operate as a title ~~lender, including requirements regarding notices and prompt remittance of excess proceeds for the sale of repossessed automobiles.~~lender.

We provide a more detailed description of the regulations to which we are subject and the regulatory environment in the jurisdictions in which we operate under “Regulatory Environment and Compliance.”

These regulations affect ~~our business in many ways, including affecting~~ the ~~loans and other products we can offer, the prices we can charge, the other terms~~entire life cycle of our ~~loans~~customer relationships and ~~other products,~~compliance with the customers to whom we are allowed to lend, how we obtain our customers, how we communicate with our customers, how we pursue repayment of our loans, and many others. Consequently, these restrictions adversely affectregulations affects our loan volume, revenues, delinquencies and other aspects of our business, including our results of operations.

~~If we fail to adhere to applicable laws and regulations, we could be subject to fines, civil penalties and other relief that could adversely affect our business and results of operations~~.

The governmental entities that regulate our business have the ability to sanction us and obtain redress for violations of these regulations, either directly or through civil actions, in a variety of different ways, including:

~~ordering remedial or corrective actions, including changes to compliance systems, product terms, and other business operations;~~

~~imposing fines or other monetary penalties, including for substantial amounts;~~

~~ordering the payment of restitution, damages or other amounts to customers, including multiples of the amounts charged;~~

~~disgorgement of revenue or profit from certain activities;~~

~~imposing cease and desist orders, including orders requiring affirmative relief, targeting specific business activities;~~

~~subjecting our operations to additional regulatory examinations during a remediation period;~~

~~changes to our U.K. business practices in response to the requirements of the Financial Conduct Authority;~~

~~revocation of licenses to operate in a particular jurisdiction;~~

~~ordering the closure of one or more stores; and~~

~~other consequences.~~

Many of the government entities that regulate us have the authority to examine us on a regular basis to determine whether we are complying with applicable laws and regulations and to identify and sanction non-compliance. In the United States, the Consumer Financial Protection Bureau, or CFPB, conducts examinations of our business, which include inspecting our books and records and inquiring about our business practices and policies, such as our marketing practices, loan application and origination practices, electronic payment practices, collection practices, and our supervision of our third-party service providers. The CFPB commenced its first examination of us in 2014 and issued its final report of examination in September 2015. The 2014 examination had no material impact on our financial condition or results of operations. The CFPB commenced its second examination of us in February 2017, and completed the related field work in June 2017. The scope of the 2017 examination included a review of our our Compliance Management System, our substantive compliance with applicable federal laws, and matters requiring attention. The 2017 examination had no material impact on our financial condition or results of operations, and we received the final CFPB Examination Report in February 2018.

During 2017, it was determined that a limited universe of borrowers may have incurred bank overdraft or non-sufficient funds fees because of possible borrower confusion about certain electronic payments we initiated on their loans. As a result, we have decided to reimburse those fees through payments or credits against outstanding loan balances, subject to per-customer dollar limitations, upon receipt of (i) claims from potentially affected borrowers stating that they were in fact confused by our practices and (ii) bank statements from such borrowers showing they incurred these fees at a time that they might reasonably have been confused about our practices. Based on the terms of the reimbursement offer we we are currently considering, we have recorded a $2.0 million liability for this matter as of December 31, 2017. However, if we decide or are forced to modify the terms of the offer-for example, to eliminate or modify caps on per-borrower refunds or to make refunds to a larger universe of borrowers-the refund offer could have a greater impact than we currently anticipate.

We are subject to these types of examinations and audits on an ongoing basis from federal, state and provincial regulators. These examinations and audits increase the likelihood that any failure to comply (or perceived failure to comply) with applicable laws and regulations will be identified and sanctioned.

If we fail to comply with federal, state, provincial or local laws and regulations, or if supervisory or enforcement authorities believe we have failed to comply, we could suffer any of the actions listed above, including fines, penalties, consumer redress, disgorgement of profits, adverse changes to our business and being forced to cease operations in applicable jurisdictions. Any of these could have a material adverse effect on our business and results of operations. Our compliance with applicable laws and regulations could also be challenged in class action lawsuits that could adversely affect our business and results of operations.

In addition to the anticipated refund offer, at least in part to meet CFPB expectations, we have made in recent years, and are continuing to make, certain enhancements to our compliance procedures and consumer

disclosures. For example, we are in the process of evaluating our payment practices. Even in advance of the effective date of the CFPB Rule (and even if the CFPB Rule does not become effective), it is possible that we will make changes to these practices in a manner that will increase costs and/or reduce revenues.

The regulations to which we are subject change from time to time, and future changes, including some that have been proposed, could restrict us in ways that adversely affect our business and results of operations.

The laws and regulations to which we are subject change from time to time, and there has been a general increase in the volume and burden of laws and regulations that apply to us in the jurisdictions in which we operate, at the federal, state, provincial and municipal levels. We describe certain proposed laws and regulations that could apply to our business in greater detail under “Business” elsewhere in this Annual Report.

At the U.S. federal level for example, in 2017 the CFPB adopted the CFPB Rule and a final rule prohibiting the use of mandatory arbitration clauses with class action waivers in consumer financial services contracts, or the CFPB Anti-Arbitration Rule. Congress overturned the CFPB Anti-Arbitration Rule on October 24, 2017, and the President signed the joint resolution on November 1, 2017 to repeal the rule. Additionally, the CFPB has announced tentative plans to propose rules affecting debt collection, debt accuracy and verification. Also, during the past few years, legislation, ballot initiatives and regulations have been proposed or adopted in various states that would prohibit or severely restrict our short-term consumer lending. We, along with others in the short-term consumer loan industry, intend to continue to inform and educate federal, state and local legislators and regulators and to oppose legislative or regulatory actions and ballot initiatives that would prohibit or severely restrict short-term consumer loans. Nevertheless, if changes in law with that effect were taken nationwide or in states in which we have a significant number of stores, such changes could have a material adverse effect on our loan-related activities and revenues.

In Canada, most of the provinces have proposed or enacted legislation or regulations that limit the amount that lenders offering single-pay loans may charge or that limit certain business practices of single-pay lenders. Some provinces have also proposed or enacted legislation or regulations that impose a higher regulatory burden on installment loans or open-end loans that are determined to be “high cost.” In the United Kingdom, Parliament and the applicable regulatory bodies have been expanding laws and regulations applicable to our industry, including proposals that would expand rules of conduct and similar duties of responsibility to certain senior managers and other employees of our businesses and that could change the price cap applicable to certain consumer loans, including the scope of loans subject to the cap. There are also forthcoming regulatory changes due to come into force in 2018 relating to the implementation of new EU data protection and anti-money laundering laws in the United Kingdom, to replace or supplement U.K. legislation in these areas. Compliance with the new regulations is expected to be more onerous than the existing regime.

We expect that ~~the interest in increasing the~~ regulation of our industry will ~~continue. It is possible~~continue and that ~~the~~ laws and regulations currently proposed, or other future laws and regulations, will be enacted and will adversely affect our pricing, product mix, compliance costs or other business activities in a way that is detrimental to our results of ~~operations.~~operations or financial condition.

~~Existing or new local regulation~~There are a range of ~~our industry~~penalties that governmental entities could ~~adversely affect our business and results of operations.~~

In recent years, a number of local laws have been passed by municipalities that regulate aspects of our business. For example, a number of municipalities have sought to use zoning and occupancy regulations to limit consumer lending storefronts. If additional local laws are passed that affect our business, this could materially restrict our business operations, increase our compliance costs or exacerbate the risks associated with the complexity of our regulatory environment.

Approximately 45 different Texas municipalities have enacted ordinances that regulate aspects of products offered under our credit access business or CAB programs, including loan sizes and repayment terms. The Texas

~~ordinances have forced us to make substantial changes to the loan products~~impose if we offer and have resulted in litigation initiated by the City of Austin challenging the terms of our modified loan products. We believe that: (i) the Austin ordinance (like its counterparts elsewhere in the state) conflicts with Texas state law and (ii) our product in any event complies with the ordinance, when it is properly construed. The Austin Municipal Court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In September 2017, the Travis County court reversed this decision and remanded the case to the Municipal Court for further proceedings consistent with its opinion (including, presumably, a decision on our second argument). However, in October 2017 we appealed the County Court's decision. Accordingly, we will not have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances in other Texas cities) for some time. A final adverse decision could potentially result in material monetary liability in Austin and elsewhere and would force us to restructure the loans we arrange in Texas.

~~The regulatory environment in which we operate is very complex, which increases our costs of compliance and the risk that we may fail to comply in ways that adversely affect our business.~~

The regulatory environment in which we operate is very complex, with applicable regulations being enacted by multiple agencies at each level of government. Accordingly, our regulatory requirements, and consequently, the actions we must take to comply with regulations, vary considerably among the many jurisdictions where we operate. Managing this complex regulatory environment is difficult and requires considerable compliance efforts. It is costly to operate in this environment, and it is possible that our costs of compliance will increase materially over time. This complexity also increases the risks that we will fail to comply with the various laws and regulations that apply to us, including:

•ordering corrective actions, including changes to compliance systems, product terms and other business operations;

•imposing fines or other monetary penalties, which could be substantial;

•ordering restitution, damages or other amounts to customers, including multiples of the amounts charged;

•requiring disgorgement of revenues or profits from certain activities;

•imposing cease and desist orders, including orders requiring affirmative relief, targeting specific business activities;

•subjecting our operations to monitoring or additional regulatory examinations during a remediation period;

•revoking licenses required to operate in ~~a way that~~particular jurisdictions; and/or

•ordering the closure of one or more stores.

Accordingly, if we fail to comply with applicable laws and regulations, it could have a material adverse effect on our ~~business and~~ results of ~~operations.~~operations or financial condition.

~~Judicial decisions could potentially render our arbitration agreements unenforceable~~.

We include pre-dispute arbitration provisions in our loan agreements. These provisions are designed to allow us to resolve any customer disputes through individual arbitration rather than in court. Our arbitration provisions explicitly provide that all arbitrations will be conducted on an individual and not on a class basis. Thus, our arbitration agreements, if enforced, have the effect of shielding us from class action liability.

In July 2017, the CFPB issued the CFPB Anti-Arbitration Rule, designed to prohibit the use of mandatory arbitration clauses with class action waivers in agreements for consumer financial services products, effective as to agreements entered into on or after March 19, 2018. However, the Anti-Arbitration Rule was overturned by Congress on October 24, 2017, and the President signed the joint resolution on November 1, 2017 to repeal the rule. Assuming the President consents to the override, the rule will not become effective, and, pursuant to the Congressional Review Act, substantially similar rules may only be reissued with specific legislative authorization.

Our ~~use of pre-dispute arbitration provisions will remain dependent on whether courts continue~~direct lending insurance operations are subject to enforce these provisions. We take the position that the Federal Arbitration Act, or the FAA, requires that arbitration agreements containing class action waivers of the type we use be enforced in accordance with their terms. In the past, a number of ~~courts,~~risks and uncertainties.

Our direct lending customers can either purchase optional insurance products through an unaffiliated insurance company and finance the premiums with their loan from us. Our insurance operations are subject to a number of risks and uncertainties, including changes in laws and regulations, customer demand, claims experience and insurance carrier relationships, the ~~California~~manner in which we can offer such products, capital and ~~Nevada Supreme Courts, have concluded~~reserve requirements, the frequency and type of regulatory monitoring and reporting, benefits or loss ratio requirements, insurance producer and agent licensing or appointment requirements and reinsurance operations. In addition, the credit insurance products that ~~arbitration agreements with class action waivers~~we offer are ~~“unconscionable”~~optional and ~~hence unenforceable, particularly where a small dollar amount is~~solely related to the loans we originate. Because we finance substantially all of our customers' insurance premiums, any decrease in ~~controversy~~demand for credit insurance products would adversely impact our insurance income as well as our interest and fee income. Insurance claims and policyholder liabilities are also difficult to predict and may exceed the related reserves set aside for claims and associated expenses for claims adjudication.

We are also dependent on ~~an individual basis. However,~~the continued willingness of unaffiliated third-party insurance companies to participate in ~~April 2011,~~ the ~~U.S. Supreme Court in a 5-4 decision in AT&T Mobility v. Concepcion held~~credit insurance market, and we cannot be certain that the FAA preempts state laws that would otherwise invalidate consumer arbitration agreements with class action waivers. Our arbitration agreements differ in some respects from the agreement at issue in Concepcion,credit insurance market will remain viable. Further, if our insurance providers are unable or unwilling to meet claims and ~~some courts have continued since Concepcion~~premium reimbursement payment obligations or premium ceding obligations, we could be subject to ~~find reasons to find arbitration agreements unenforceable. Thus, it is possible that one~~ increased net credit losses, regulatory scrutiny, litigation and other losses and expenses. If any of these events, risks,

or more courts could use the differences between our arbitration agreements and the agreement at issue in Concepcion as a basis for a refusal to enforce our arbitration agreements, particularly if such courts are hostile to our kind of lending or to pre-dispute mandatory consumer arbitration agreements. Further, it is possible that a change in composition at the U.S. Supreme Court, including the replacement of Justice Scalia by Justice Gorsuch, could result in a change in the U.S. Supreme Court’s treatment of arbitration agreements under the FAA. If our arbitration agreementsuncertainties were to ~~become unenforceable for some reason, we~~occur, it could ~~experience an increase to our costs to litigate and settle customer~~

~~disputes and exposure to potentially damaging class action lawsuits, with~~have a ~~potential~~ material adverse effect on our ~~business~~financial condition and results of ~~operations.~~operations and cash flows.

~~Current~~Our stock price, reputation and ~~future legal,~~financial results could be adversely affected by media and public perception of our credit products.

Consumer advocacy groups and various media outlets continue to criticize alternative financial services providers. These critics often characterize such alternative financial services providers as predatory or abusive toward consumers. If these persons were to criticize the products that we offer, it could negatively impact our relationships with existing borrowers and our ability to attract new borrowers and generate dissatisfaction among our employees.

Litigation, including class ~~action~~actions, and administrative proceedings ~~directed towards~~against us or our industry ~~or us may~~could have a material adverse ~~impact~~effect on our results of operations, cash flows ~~and~~or financial condition.

We have been the subject of administrative proceedings and lawsuits, as well as class actions, in the past, and may be involved in future proceedings, lawsuits or other claims. See Item 1, "Business—Regulatory Environment and Compliance— U.S. Regulations—U.S. and State" and Note 7 , “Commitments and Contingencies” for a description of material litigation. Other companies in our industry have also been subject to ~~regulatory proceedings,~~litigation, class action lawsuits and ~~other litigation~~administrative proceedings regarding the offering of consumer ~~loans. We~~loans and the resolution of those matters could be adversely ~~affected by interpretations of state, federal, foreign and provincial laws in those legal and regulatory proceedings, even if we are not a party to those proceedings.~~affect our business. We anticipate that lawsuits and enforcement proceedings involving our industry, and potentially involving us, will continue to be ~~brought in the future.~~brought.

We may incur significant expenses associated with the defense or settlement of ~~current or future lawsuits, the potential exposure for which is uncertain.~~lawsuits. The adverse resolution of legal or regulatory proceedings ~~whether by judgment or settlement,~~ could force us to refund fees and interest collected, refund the principal amount of advances, pay damages or ~~other~~ monetary penalties or modify or terminate our operations in particular ~~local, state, provincial or federal~~ jurisdictions. The defense of such legal proceedings, even if successful, is expensive and requires significant time and attention from our senior officers and other management personnel that would otherwise be spent on other aspects of our business, and requires the expenditure of substantial amounts for legal fees and other related costs.management. Settlement of proceedings may also result in significant cash payouts, foregoing future revenues and modifications to our operations. Additionally, an adverse judgment or settlement ~~in a lawsuit or regulatory proceeding~~ could result in ~~certain circumstances provide a basis for~~ the termination, non-renewal, suspension or denial of a license required for us to do business in a particular jurisdiction (or multiple jurisdictions). A sufficiently serious violation of law in one jurisdiction or with respect to one product could have adverse licensing consequences in other jurisdictions and/or with respect to other products. Thus, legal and enforcement proceedings could have a material adverse effect on our business, future results of operations, financial condition ~~and~~or our ability to service our debt obligations.

~~Public perception~~Judicial decisions or new legislation could potentially render our arbitration agreements unenforceable.

We include arbitration provisions in certain customer loan agreements in the United States. Arbitration provisions require that disputes with customers be resolved through individual arbitration rather than in court. Thus, our arbitration provisions, if enforced, have the effect of shielding us from class action liability. The effectiveness of arbitration provisions depends on whether courts will enforce these provisions. A number of courts, including the California Supreme Court, have concluded that arbitration agreements with class action waivers are unenforceable, particularly where a small dollar amount is in controversy on an individual basis. If our arbitration provisions are found to be unenforceable, our costs to litigate and settle customer disputes could increase and we could face class action lawsuits, with a potential material adverse effect on our results of operations or financial condition.

Risk Factor Relating to our Investment in Katapult

Our operating results may be adversely affected by our investment in Katapult.

Our fully diluted ownership of Katapult as of December 31, 2022 was 19.5%, assuming full payout of earnout shares, and 18.2% excluding payout of earnout shares. We apply the equity method of accounting to certain shares of common stock and interests that qualify as in-substance common stock. We recognize our share of Katapult's income or losses on a one-quarter lag related to the equity method investment. We cannot provide assurance that our investment will (i) increase or maintain its value, or (ii) that we will not incur losses from the holding of such investments.

General Risk Factors

We may fail to meet our publicly announced guidance or other expectations about our business and future operating results which would cause our stock price to decline.

We may provide guidance about our business and future operating results. In developing this guidance, we make certain assumptions and judgments about our future performance, which are difficult to predict. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. The

assumptions used or judgments applied to our operations to project future operating and ~~products as being predatory~~financial results may be inaccurate and could result in a material reduction in the price of our common stock, which we have experienced in the past. Our business results may also vary significantly from our guidance or ~~abusive~~our analyst’s consensus due to a number of factors which are outside of our control and which could ~~negatively~~adversely affect our ~~business, results of~~ operations and financial ~~condition.~~results. Furthermore, if we make downward revisions of previously announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock could decline.

~~Certain consumer advocacy groups, politicians, government officials~~The market price of our common stock may be volatile.

The stock market is highly volatile. As a result, the market price and media organizations promote the view that short-term single-payment loans and other alternative financial services like those we offer are predatory or abusive toward consumers. Widespread adoption of this opinion could potentially have negative consequencestrading volume for our stock may also be highly volatile, and investors may experience a decrease in the value of their shares, which may be unrelated to our operating performance or business ~~including lawsuits, adverse legislative~~prospects. Factors that could cause the market price of our common stock to fluctuate significantly include:

•our operating and financial performance and prospects and the performance of competitors;

•our quarterly or ~~regulatory changes, difficulty attracting and retaining qualified employees, decreased~~annual earnings or those of competitors;

•the size of the public float of our common stock;

•conditions that impact demand for our products and ~~services~~services;

•our ability to accurately forecast our financial results;

•changes in earnings estimates or recommendations by securities or research analysts who track our common stock;

•market and ~~reluctance~~industry perception of our level of success in pursuing our business strategy;

•strategic actions by us or ~~refusal of other parties,~~our competitors, such as ~~banks~~acquisitions or restructurings;

•changes in laws and regulations;

•changes in accounting standards, policies, guidance, interpretations or principles;

•arrival or departure of members of senior management or other ~~electronic payment processors,~~key personnel;

•the number of shares that are publicly traded;

•exclusion of our common stock from certain market indices, which could reduce the ability of certain investment funds to ~~transact business with us. These consequences could have a material adverse impact~~own our common stock and put short-term selling pressure on our common stock;

•sales of common stock by us, our investors or members of our management team;

•potential dilution to our common stock, including the award and vesting of equity awards to our employees under our 2017 Incentive Plan;

•unfavorable or misleading information published by securities or industry analysts;

•factors affecting the industry in which we operate, including competition, innovation, regulation and the economy; and

•changes in general market, economic and political conditions, including those resulting from natural disasters, health emergencies (such as COVID-19), telecommunications failures, cyber-attacks, civil unrest, acts of war, terrorist attacks or other catastrophic events.

Any of these factors may result in large and sudden changes in the trading volume and market price of our common stock and may prevent you from being able to sell your shares at or above the price you paid for them. Following periods of volatility, stockholders may file securities class action lawsuits. Securities class action lawsuits are costly to defend and divert management’s attention and, if adversely determined, could involve substantial damages that may not be covered by insurance.

Our business could suffer as the result of the loss of the services of our senior executives or if we cannot attract and ~~results~~retain talented employees.

We compete with other companies both within and outside of ~~operations.~~

~~Material modifications~~our industry for talented employees. If we cannot recruit, train, develop and retain sufficient numbers of ~~U.S. laws~~talented employees, we could experience increased turnover, decreased customer satisfaction, operational challenges, low morale, inefficiency or internal control failures. Insufficient numbers of talented employees, particularly IT developers, could also limit our ability to grow and ~~regulations~~expand our businesses. Labor shortages could also result in higher wages that would increase our labor costs, which could reduce our profits. In addition, the efforts and ~~existing trade agreements by~~abilities of our senior executives are important elements of maintaining our competitive position and driving future growth, and the ~~new U.S. presidential administration~~loss of the services of one or more of our senior executives could ~~adversely affect~~result in challenges executing our business ~~financial condition and results~~strategies or other adverse effects on our business. The reduced value of ~~operations.~~the equity awards we have awarded under our 2017 Incentive Plan could be a factor in causing an individual senior executive to leave the Company.

The ~~U.S. presidential administration~~original founders of the company ("Founders") own a significant percentage of our outstanding common stock and their interests may ~~initiate significant~~conflict with ours or yours in the future.

At March 3, 2023, the Founders owned approximately 41.8% of our outstanding common stock. Two of the Founders are members of our Board of Directors, and one also serves as Chairman of the Board. Accordingly, the Founders collectively can exert control over many aspects of our company, including the election of directors. The Founders interests may not in all cases be aligned with your interests.

Provisions in our charter documents could discourage a takeover that stockholders may consider favorable.

Certain provisions in our governing documents could make a merger, tender offer or proxy contest involving us difficult, even if such events would be beneficial to your interests. Among other things, these provisions:

•permit our Board of Directors to set the number of directors and fill vacancies and newly-created directorships;

•authorize “blank check” preferred stock that our Board of Directors could use to implement a stockholder rights plan;

•provide that our Board of Directors is authorized to amend or repeal any provision of our bylaws;

•restrict the forum for certain litigation against us to Delaware;

•establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings;

•require that actions to be taken by our stockholders be taken only at an annual or special meeting of our stockholders, and not by written consent; and

•establish certain limitations on convening special stockholder meetings.

These provisions may delay or prevent attempts by our stockholders to replace members of our management by making it more difficult for stockholders to replace members of our Board of Directors. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock. We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers or investors aiming to effect changes in ~~U.S. laws~~management to negotiate with our Board of Directors and ~~regulations~~by providing our Board of Directors with more time to assess any proposal. However, such anti-takeover provisions could also depress the price of our common stock by acting to delay or prevent a change in control.

Our amended and ~~existing international trade agreements, including~~restated certificate of incorporation provides that the ~~North American Free Trade Agreement,~~Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and ~~these changes~~our stockholders, which could ~~affect~~limit our stockholders’ ability to obtain a ~~wide variety~~favorable judicial forum for disputes with us or our directors, officers or employees.

The choice of ~~industries~~forum provision in our amended and ~~businesses, including those businesses we own~~restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes with stockholders. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and operate. It remains unclear what the new U.S. presidential administration will do, if anything, with respect to existing laws, regulations or trade agreements. If the new presidential administration materially modifies U.S. laws and regulations and international trade agreements this could adversely affect our business and resultsmay discourage many types of ~~operations.~~lawsuits.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of December 31, ~~2017,~~2022, we leased ~~214~~496 stores in the ~~United States~~U.S. and ~~193~~149 stores in Canada. Our ~~operating lease agreements for~~U.S. stores include 390 branches from the ~~buildings in~~acquisition of Heights Finance, which we ~~operate expire at various times through 2030,~~acquired in December 2021 and 106 branches from the ~~majority~~acquisition of the leases have an original term of five years with two, five-year renewal options. Most of the leases have escalation clauses and several also require payment of certain period costs including maintenance, insurance and property taxes.First Heritage, which we acquired in July 2022. We lease our principal executive ~~offices, which are located in Wichita, Kansas. We also maintain a financial technology~~ office in Chicago, Illinois. We also lease administrative offices in ~~Canada~~Wichita, Kansas; Greenville, South Carolina; Toronto, Ontario and ~~in the U.K. along with~~Ridgeland, Mississippi. Our centralized collections facilities are in ~~each~~the U.S. and Canada. See Note 1 1 , "Leases" and Note 1 5, "Related Pa r ty Transactions" of the ~~three countries. See Note 19, "Operating Leases" in this Annual Report~~Notes to Consolidated Financial Statements for additional information on our operating ~~lease agreements~~leases with real estate entities that are related to us through common ownership.

ITEM 3. LEGAL PROCEEDINGS

~~The section below describes material developments in 2017 relating to various administrative proceedings with regulatory authorities~~See Note 7 , "Commitments and ~~lawsuits involving us or our subsidiaries.~~

~~Harrison, et al v. Principal Investments, Inc. et al~~

During the period relevant to this class action litigation, we pursued in excess of 16,000 claims in the limited actions and jurisdiction court in Clark County, Nevada, seeking payment of loans on which customers had defaulted. We utilized outside counsel to file these debt collection lawsuits. On Scene Mediations, a process serving company, was employed to serve the summons and petitions in the majority of these cases. In an unrelated matter, the principal of On Scene Mediations was convicted of multiple accounts of perjury and filing false affidavits to obtain judgments on behalf of a Las Vegas collection agency. In September 2010, we were sued by four former customers in a proposed class action suit filed in the District Court in Clark County, Nevada. The plaintiffs in this case claimed that they, and others in the proposed class, were not properly served noticeContingencies" of the ~~debt collection lawsuits by us.~~

On June 7, 2017, the parties reached a settlement in this matter. We have accrued approximately $2.3 million as a result of this settlement as of December 31, 2017. At a hearing before the District Court in Clark County, Nevada, on July 24, 2017 the court granted preliminary approval of the settlement. On October 30, 2017, the court issued final approval of the class settlement.

~~City of Austin~~

We were cited on July 5, 2016 by the City of Austin, Texas for alleged violations of the Austin, Texas ordinance addressing products offered by CSOs. The Texas ordinances regulate aspects of products offered under our CAB programs, including loan sizes and repayment terms. We believe that: (1) the Austin ordinance (like its counterparts elsewhere in the state) conflicts with Texas state law and (2) our product in any event complies with the ordinance, when it is properly construed. The Austin Municipal Court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In September 2017, the Travis County court reversed the Municipal Court’s decision and remanded the case for further proceedings. We appealed the County Court's decision in October 2017, and the appeal is currently pending. We will not have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances in other Texas cities) for some time. A final adverse decision could potentially result in material monetary liability in Austin and elsewhere and would force us to restructure the loans we arrange in Texas.

~~Other~~

We are a defendant in certain routine litigation matters encountered in the ordinary course of our business. Certain of these matters may be covered to an extent by insurance. In the opinion of management, based upon the advice of legal counsel, the likelihood is remote that the impact of any pending legal proceedings and claims, either individually or in the aggregate, would have a material adverse effect on our consolidated financial condition, results of operations or cash flows. For more information, see Note 18 - “Contingent Liabilities” of our Notes to Consolidated Financial ~~Statements. The resolution~~Statements for a summary of ~~these matters is not expected to have a material adverse effect on~~ our ~~financial position, results of operations or liquidity.~~legal proceedings and claims.

~~ITEM~~Item 4. ~~MINE SAFETY DISCLOSURES~~Mine Safety Disclosures

~~Not Applicable.~~None.

PART IIII. FINANCIAL INFORMATION

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~Market Information~~

~~Our IPO closed on December 11, 2017, and~~The principal market for our common stock ~~began trading on~~is the NYSE ~~on December 7, 2017,~~and our shares of common stock are listed under the symbol "CURO." ~~Prior to this date there was no public market for our common stock. The following table sets forth the reported high and low sales prices per share for our common stock on the NYSE.~~

High Low
Fourth Quarter 2017 (from December 7, 2017) $ 14.99
$ 13.50

~~Dividends~~

On May 12, 2017, we declared a dividend of $28.0 million, which was paid to our stockholders on May 15, 2017, on August 2, 2017, we declared a dividend of $8.5 million, which was paid to our stockholders on August 11, 2017 and on October 16, 2017, we declared a dividend of $5.5 million, which was paid to our stockholders on October 16, 2017. In connection with issuance of the additional 12.00% Senior Secured Notes on November 2, 2017, we declared a dividend of $140.0 million on November 2, 2017, which was paid to our stockholders on November 2, 2017. We have otherwise not paid regular or special dividends since our inception in 2013. The terms of our indebtedness limit the ability of CFTC to pay dividends to CURO Group Holdings Corp., which would be necessary for us to pay dividends on our common stock.

Any future determinations relating to our dividends and earning retention policies will be made at the discretion of our board of directors, who will review such policies from time to time in light of our earnings, cash flow generation, financial position, results of operations, the terms of our indebtedness and other contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.

~~Holders~~

As of March ~~1, 2018,~~3, 2022, there were ~~74 stockholders~~approximately 12 holders of record of our common stock. Holders of record do not include an indeterminate number of beneficial holders whose shares ~~may be~~are held through brokerage accounts and clearing agencies.

Dividends

Our Board of Directors approved a quarterly dividend program in 2020 for $0.055 per share ($0.22 annualized), which was increased to $0.11 per share in May of 2021 ($0.44 annualized), which was continued on a quarterly basis until the third quarter of 2022. In October 2022, our Board suspended the quarterly dividend program. Our Board has discretion to determine whether to pay dividends in the future based on a variety of factors, including our earnings, cash flow generation, financial condition, results of operations, the terms of our indebtedness and other contractual restrictions, capital requirements, business prospects and other factors the Board may deem relevant.

Issuer Purchases of Equity Securities by

In May 2021, our Board of Directors authorized a share repurchase program providing for the ~~Issuer~~repurchase of up to $50.0 million of our common stock. The program commenced in June 2021 and ~~Affiliated Purchasers~~was completed in February 2022. In February 2022, our Board authorized a new share repurchase program for the repurchase of up to $25.0 million of CURO common stock. There were no repurchases under this program as of December 31, 2022.

~~None.~~The following table provides information with respect to repurchases we made of our common stock during the quarter ended December 31, 2022.

~~Recent Sales of Unregistered Securities~~


Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that may yet be Purchased under the Plans or Programs(2) (in millions)
October 2022	—	$	—	—	$	25.0
November 2022	1,022	3.51		—	25.0
December 2022	12,537	3.44		—	25.0
Total	13,559	$	3.45	—
(1) Includes shares withheld from employees as tax payments for shares issued under our stock-based compensation plans. See Note 10, "Share-based compensation" of the 2022 Form 10-K for additional details on our stock-based compensation plans.
(2) As of the end of the period.

~~None.~~

ITEM 6. ~~SELECTED~~[RESERVED]

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ~~DATA~~CONDITION AND RESULTS OF OPERATIONS

Components of Our Results of Operations

As a result of the sale of the Legacy U.S. Direct Lending Business on July 8, 2022, the Company no longer guarantees loans originated by third-party lenders through CSO programs. As such, the Company's results of operations discussed below only include the results from the CSO program through July 8, 2022. Refer to Note 14, "Acquisitions and Divestiture" for additional information.

Revenue

The core consumer finance products we offer include Revolving LOC and Installment loans. Interest and fees revenue in our Consolidated Statements of Operations includes interest income, merchant discount revenue (MDR), finance charges and CSO fees. Insurance revenue includes the premiums and commissions we earn on insurance products. Other revenue includes late fees, membership fees and non-sufficient funds fees. Product offerings differ by, and are governed by the laws in each, jurisdiction in which we operate.

Revolving LOC loans are lines of credit without specified maturity dates and include our POS financing products at Flexiti. We record revenue from Revolving LOC loans on a simple-interest basis. Revolving LOC revenues include interest income on outstanding revolving balances and other usage or maintenance fees as permitted by underlying statutes. Accrued interest and fees are included in "Gross loans receivable" in the Consolidated Balance Sheets. Revolving LOC revenues also include MDR, which represents a fee charged to merchant partners to facilitate customer purchases at merchant locations. The fee is recorded as unearned revenue when received and recognized over the expected loan term.

Historically, Installment loans range from unsecured, short-term, small-denomination loans, whereby a customer receives cash in exchange for a post-dated personal check or pre-authorized debit from the customer's bank account, to fixed-term, fully amortizing loans with a fixed payment amount due each period during the term of the loan. With the acquisitions of Heights Finance in December 2021 and First Heritage in July 2022, we now offer long-term large loans to customers. For our short-term, small denomination loans, we recognize revenue on a constant-yield basis ratably over the team of each loan. We defer and recognize unearned fees over the remaining term of the loan at the end of each reporting period. Revenues from these short-term loans represent deferred presentment or other fees as defined by the underlying provincial or national regulations. For our fixed-term, fully amortizing loans, we record revenues on a simple-interest basis. Revenue for fixed-term Installment loans includes interest income from Company-Owned loans, CSO fees and non-sufficient funds or returned-items fees on late or defaulted payments on past-due loans, known as late fees. Late fees comprise approximately 1% of Installment revenues. Accrued interest and fees are included in "Gross loans receivable" in the Consolidated Balance Sheets.

We also offer a number of insurance products, including optional credit protection insurance, life insurance, auto and home insurance, property insurance, check cashing, prepaid cards, demand deposit accounts and money transfer services. We earn miscellaneous fees revenues such as administrative fees, deferral fees, annual membership fees and over limit fees. Heights Finance and First Heritage offer optional insurance products, including credit life, credit accident and health, credit property insurance and credit involuntary unemployment insurance through policies written by unaffiliated third-party insurance companies. Insurance commissions, written in connection with certain loans, are credited to unearned insurance commissions and recognized as income over the life of the related insurance contracts, using a method similar to that used for the recognition of interest income.

Provision for Losses

Credit losses are an inherent part of outstanding loans receivable. We maintain an ALL for gross loans receivable at a level estimated to be adequate to absorb such losses based primarily on our analysis of historical loss rates of products containing similar risk characteristics. The ALL reduces the outstanding gross loans receivables balance in the Consolidated Balance Sheets. The liability for estimated incurred losses related to loans originated by third-party lenders through CSO programs, which we guarantee but do not include in the Consolidated Financial Statements (referred to as "Guaranteed by the Company"), is reported in "Liability for losses on CSO lender-owned consumer loans" in the Consolidated Balance Sheets. Changes in either the allowance or the liability, net of charge-offs and recoveries, are recorded as “Provision for losses” in the Consolidated Statements of Operations.

Operating Expense

Our primary categories of operating expense are as follows:

•Salaries and Benefits—includes salaries and personnel-related costs, including benefits, bonuses and share-based compensation expense.

•Occupancy—includes rent expense on our leased facilities and equipment, utilities, insurance and certain maintenance expenses.

•Advertising—costs are expensed as incurred and include costs associated with attracting, retaining and/or reactivating customers as well as creating brand awareness. We have internal creative, web and print design capabilities and if we outsource these services, it is limited to mass-media production and placement. Advertising expense also includes costs for all marketing activities including paid search, advertising on social networking sites, affiliate programs, direct response television, radio air time and direct mail.

•Direct Operations—includes expenses associated with the direct operations and technology infrastructure related to loan underwriting, collections and processing, and bank service charges and credit scoring charges.

•Depreciation and amortization—includes all store and corporate depreciation and amortization expense.

•Other operating expense—includes expenses such as office expense, security expense, travel and entertainment expenses, certain taxes, legal and professional fees, foreign currency impact to our intercompany balances, gains or losses on foreign currency exchanges, disposals of fixed assets, certain store closure costs and other miscellaneous income and expense amounts.

Other Expense

Our non-operating expenses include the following:

•Interest Expense—includes interest primarily related to our Senior Secured Notes, our SPV facilities and our revolvers, including any unused portion of commitment fees.

•Loss (income) from equity method investment, Gain from equity method investment—includes our share of Katapult's income or loss and a recognized gain from the merger of Katapult and FinServ in 2021. Refer to Item 1, "Business—Company History and Overview" and Note 5 , "Fair Value Measurements" of the Notes to the Consolidated Financial Statements for additional details on our equity method investment.

•Goodwill impairment—includes the impairment losses recorded on the U.S. Direct Lending and Canada POS Lending reporting unit in the fourth quarter of 2022. Refer to Note 4 , "G oodwill and Intangibles " of the Notes to the Consolidated Financial Statements for additional details.

•Loss on extinguishment of debt— includes costs associated with the extinguishment of debt facilities.

•(Gain) loss on change in fair value of contingent consideration—includes change in contingent consideration payable as part of the Flexiti acquisition in March 2021.

Consolidated Revenue by Product and Segment

Beginning in 2022, we report "Interest and fees revenue," "Insurance premiums and commissions" and "Other revenue" in place of our previously reported "Revenue" on our Statements of Operations. Prior period presentations have been revised to conform to the current period presentation.

The following table ~~presents selected historical financial data~~summarizes revenue by product for the ~~three~~period indicated:


	For the Year Ended
	December 31, 2022										December 31, 2021
(in thousands)	U.S. Direct Lending		Canada Direct Lending		Canada POS Lending		Total		% of Total		U.S. Direct Lending		Canada Direct Lending		Canada POS Lending		Total		% of Total
Revolving LOC	$	57,269	$	193,212	$	95,332	$	345,813	33.7	%	$	106,302	$	156,000	$	32,289	$	294,591	36.0	%
Installment	511,538		48,056		—		559,594		54.5	%	405,409		43,735		—		449,144		54.9	%
Total interest and fees revenue	568,807		241,268		95,332		905,407		88.3	%	511,711		199,735		32,289		743,735		90.9	%
Insurance premiums and commissions	31,594		54,561		2,335		88,490		8.6	%	275		48,714		421		49,410		6.0	%
Other revenue	15,321		7,921		8,779		32,021		3.1	%	13,976		8,590		2,132		24,698		3.0	%
Total revenue	$	615,722	$	303,750	$	106,446	$	1,025,918	100.0	%	$	525,962	$	257,039	$	34,842	$	817,843	100.0	%

During the year ended December 31, 2022, total revenue increased $208.1 million, or 25.4%, to $1,025.9 million, compared to the prior-year period, primarily driven by growth in U.S. Direct Lending revenue due to our acquisitions of Heights Finance in December 2021 and First Heritage in July 2022, partially offset by the sale of the Legacy U.S. Direct Lending Business in July 2022, organic growth in Canada Direct Lending and increased revenue in Canada POS Lending related to a full year of consolidated results and significant increases in loan balances at Flexiti, which we acquired in March 2021.

Product Revenue for the Year Ended December 31, 2022

•Revolving LOC

◦Revolving LOC revenue for the year ended December 31, 2022 increased $51.2 million, or 17.4%, compared to the prior-year period, driven by growth and a full year of consolidated results in Canada POS lending of $63.0 million, or 195.2%, and Canada Direct Lending revenue of $37.2 million, or 23.9%, partially offset by the impact of the sale of the Legacy U.S. Direct Lending Business in July 2022.

•Installment

◦Installment revenue for the year ended December 31, 2022 increased $110.5 million, or 24.6%, compared to the prior-year period, primarily due to an increase of $106.1 million in U.S. Direct Lending installment revenue driven by our acquisitions of Heights Finance and First Heritage.

•Insurance premiums and commissions

◦Insurance premiums and commissions for the year ended December 31, 2022 increased $39.1 million, or 79.1%, compared to the prior-year period, primarily due to an increase of $31.3 million in U.S. Direct Lending insurance premiums and commission revenue driven by our acquisitions of Heights Finance and First Heritage. Canada Direct Lending grew $5.8 million, or 12.0%, year over year, due to organic growth in the sale of insurance products to Revolving LOC and Installment loan customers in Canada.

•Other revenue

◦Other revenue for the year ended December 31, 2022 increased $7.3 million, or 29.7%, versus the prior-year period, due to a $6.6 million increase in other revenue for Canada POS Lending as ancillary fees rose in line with overall loan growth.

The following table summarizes revenue by product for the periods indicated:


	For the Year Ended
	December 31, 2021										December 31, 2020
(in thousands)	U.S. Direct Lending		Canada Direct Lending		Canada POS Lending		Total		% of Total		U.S. Direct Lending		Canada Direct Lending		Canada POS Lending		Total		% of Total
Revolving LOC	$	106,302	$	156,000	$	32,289	$	294,591	36.0	%	$	134,449	$	115,053	$	—	$	249,502	29.4	%
Installment	405,409		43,735		—		449,144		54.9	%	489,057		49,628		—		538,685		63.6	%
Total interest and fees	511,711		199,735		32,289		743,735		90.9	%	623,506		164,681		—		788,187		93.0	%
Insurance premiums and commissions	275		48,714		421		49,410		6.0	%	—		35,553		—		35,553		4.2	%
Other revenue	13,976		8,590		2,132		24,698		3.0	%	15,018		8,638		—		23,656		66.5	%
Total revenue	$	525,962	$	257,039	$	34,842	$	817,843	100.0	%	$	638,524	$	208,872	$	—	$	847,396	100.0	%

For a comparison of our results of operations for the years ended December 31, ~~2017. The selected consolidated financial data should be read in conjunction with~~2021 and ~~are qualified by reference to “Management’s~~2020, see "Management's Discussion and Analysis of Financial Condition and Results of ~~Operations” included~~Operations—Revenue by Product and Segment and Related Loan Portfolio Performance" in Part II Item 7 of ~~this~~our 2021 Form ~~10-K~~10-K.

Consolidated Results of Operations

Beginning in 2021, we changed our presentation of operating expenses on our Statements of Operations. We have revised prior period presentations to conform to the current period presentation. Refer to "—Operating Expense" above for a description of expenses included within each operating expense line item.

The table below presents our ~~audited~~ consolidated results of operations. A further discussion of the results of our operating segments is provided under "Segment Analysis" below.


(in thousands)	For the Year Ended December 31,
		2022		2021		2020
Revenue
Interest and fees revenue		$	905,407	$	743,735	$	788,188
Insurance premiums and commissions		88,490		49,411		35,553
Other revenue		32,021		24,697		23,655
Total revenue		1,025,918		817,843		$ 847,396
Provision for losses		400,325		245,668		288,811
Net revenue		625,593		572,175		558,585
Operating Expenses
Salaries and benefits		281,636		237,109		196,817
Occupancy		59,485		55,559		57,271
Advertising		32,143		38,762		44,552
Direct operations		64,128		60,056		46,893
Depreciation and amortization		36,322		26,955		17,498
Other operating expense		82,811		68,473		47,048
Total operating expenses		556,525		486,914		410,079
Other expense (income)
Interest expense		185,661		97,334		72,709
Loss (income) from equity method investment		3,985		(3,658)		—
Gain from equity method investment		—		(135,387)		(4,546)
Goodwill impairment		145,241		—		—
Loss on extinguishment of debt		4,391		40,206		—
(Gain) loss on change in fair value of contingent consideration		(7,605)		6,209		—
Gain on sale of business		(68,443)		—		—
Total other expense (income)		263,230		4,704		68,163
(Loss) income from continuing operations before income taxes		(194,162)		80,557		80,343
(Benefit) provision for income taxes		(8,678)		21,223		5,895
Net (loss) income from continuing operations		(185,484)		59,334		74,448
Net income from discontinued operations, net of tax		—		—		1,285
Net (loss) income		$	(185,484)	$	59,334	$	75,733

Comparison of Consolidated Results of Operations for the Years Ended December 31, 2022 and 2021

Revenue

For a discussion of revenue, see "—Consolidated Revenue by Product and Segment" above.

Provision for Losses

Provision for losses increased by $154.7 million, or 63.0%, for the year ended December 31, 2022 compared to the prior-year period, primarily driven by:

•Year-over-year loan growth, driven by strong consumer demand, across all loan portfolios compared to the same period in the prior year;

◦Continued orderly credit normalization associated with loan growth as customers returned to pre-COVID-19 payment behaviors resulting in higher NCO rates and past due rates as compared to the prior year when customers received government stimulus payments;

◦Full year of provision for losses for our Heights Finance acquisition of $114.6 million;

◦Full year of provision for loan losses and increased gross loans receivable balance for Canada POS Lending of $45.2 million, an increase of $20.5 million compared to the prior-year period;

◦Partial year of provision for losses for our First Heritage acquisition of $14.5 million; and

◦Decrease in provision for losses compared to the prior-year period for our Legacy U.S. Direct Lending Business divestiture of $53.5 million.

Operating Expenses

Operating expenses for the year ended December 31, 2022 increased $69.6 million, or 14.3%, primarily driven by:

Salaries and benefits. Salaries and benefits expense was $281.6 million for the year ended December 31, 2022, an increase of $44.5 million, or 18.8%, compared to the prior-year period. The increase is largely due to the acquisitions of Heights Finance and First Heritage, and a full year of Canada POS Lending business salaries and benefits, partially offset by the July 2022 divestiture of our Legacy U.S. Direct Lending Business and severance benefits as the result of restructuring initiatives implemented in the fourth quarter of 2022.

Occupancy. Occupancy expense was $59.5 million for the year ended December 31, 2022, an increase of $3.9 million, or 7.1%, compared to the prior-year period. The increase was largely due to the acquisitions of Heights Finance and First Heritage, which represent all U.S. Direct Lending stores, as of December 31, 2022, partially offset by the 160 stores transferred as part of the July 2022 divestiture of our Legacy U.S. Direct Lending Business.

Advertising.Advertising expense was $32.1 million for the year ended December 31, 2022, a decrease of $6.6 million, or 17.1%, compared to the prior-year period. The decrease was primarily due to decreases in advertising spending in the U.S. Direct Lending business due to lower advertising at Heights Finance and First Heritage compared to the Legacy U.S. Direct Lending Business.

Direct operations. Direct operations expense was $64.1 million for the year ended December 31, 2022, an increase of $4.1 million, or 6.8%, compared to the prior-year period. The increase is primarily driven by increased expenses incurred while growing the loan portfolio year over year.

Depreciation and amortization. Depreciation and amortization expense for the year ended December 31, 2022, increased $9.4 million, or 34.8%, compared to the prior-year period, primarily due to amortization expense recorded on Canada POS Lending and acquired intangible asserts related to Heights Finance and First Heritage, offset by decreased depreciation expense related to store fixed assets sold as part of the Legacy U.S. Direct Lending Business divestiture.

Other operating expenses. Other operating expenses were $82.8 million for the year ended December 31, 2022, an increase of $14.3 million, or 20.9%, compared to the prior-year period, primarily driven by costs incurred for the sale of the Legacy U.S. Direct Lending Business and the acquisitions of Heights Finance and First Heritage. Refer to the "—Segment Analysis" below for additional details.

Other Expense

Other expenses for the year ended December 31, 2022 were $263.2 million, an increase of $258.5 million compared to the prior-year period, primarily driven by:

Interest expense. Interest expense for the year ended December 31, 2022, increased $88.3 million, or 90.7%, primarily driven by increased non-recourse ABL borrowing to support organic loan growth and acquired portfolios, Senior Notes issued to fund in part our Heights Finance acquisition and an increase in benchmark rates on variable rate debt.

Equity method investment. During the second quarter of 2021 Katapult became a public company via a SPAC merger, generating a pretax gain of $135.4 million. The Company's share of Katapult earnings and losses was $3.7 million of income for 2021 and $4.0 million of losses for 2022.

Goodwill impairment. We recorded a $107.8 million goodwill impairment in the U.S. Direct Lending reporting unit and a $37.4 million goodwill impairment in the Canada POS Lending reporting unit during the fourth quarter of 2022.

Loss on extinguishment of debt. We recorded a $4.4 million loss on extinguishment of debt for the year ended December 31, 2022 related to the write off of deferred financing costs of debt facilities that we refinanced during 2022. The Loss on extinguishment of debt for the year ended December 31, 2021 of $40.2 million was due to the redemption of the 8.25% Senior Secured Notes.

Gain or loss on change in fair value of contingent consideration. We recorded a $7.6 million gain related to the decrease in fair value of the contingent consideration liability related to the Flexiti acquisition during the year ended December 31, 2022 and a $6.2 million loss related to the increase in the fair value of contingent consideration liability during the year ended December 31, 2021.

Gain on sale of business. We recorded a gain on sale of our Legacy U.S. Direct Lending Business of $68.4 million that occurred in July 2022.

Provision for Income Taxes

The effective income tax rate for the year ended December 31, 2022 was 4.5%. The income tax benefit recognized as a result of being in a pre-tax loss position was lower than the blended federal and state/provincial statutory rate of approximately 26%, primarily as a result of lost tax benefits related to the divestiture of the Legacy U.S. Direct Lending Business of $11.1 million, share-based compensation of $0.2 million, officers’ compensation of $1.5 million, non-deductible transaction costs of $0.2 million and non-deductible goodwill impairment of $26.9 million, partially offset by tax benefits related to change in fair value of contingent consideration of $2.1 million. The effective income tax rate of adjusted tax expense included in Adjusted Net Income for the year ended December 31, 2022 was 22.1%.

The effective income tax rate for the year ended December 31, 2021 was 26.3%, consistent with the blended federal and state/provincial statutory rate of approximately 26%. The income tax expense includes nondeductible expense items related to the change in fair value of contingent consideration of $1.6 million and nondeductible transaction costs of $1.2 million, partially offset by proportionally more net income in lower-tax rate jurisdictions, driven by the gain on the Katapult transaction of $146.9 million in the second quarter of 2021 and the loss on extinguishment of debt of $40.2 million in the third quarter of 2021. Additionally, income tax expense includes the release of a valuation allowance of $0.4 million due to our share of Katapult's income, tax benefits related to share-based compensation of $0.8 million, $0.2 million tax expense of additional Texas accrual for 2020 due to the settlement of 2013 to 2019 Texas returns and a tax benefit of $0.9 million for the recognition of research and development tax credit.

Comparison of Consolidated Results of Operations for the Years Ended December 31, 2021 and 2020

For a comparison of our results of operations for the years ended December 31, 2021 and 2020, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Results of Operations" in Part II Item 7 of our 2021 Form 10-K.

Segment Analysis

The following is a summary of portfolio performance and results of operations for the segment and period indicated. We report financial ~~statements,~~results for three reportable segments: U.S.Direct Lending, Canada Direct Lending and Canada POS Lending.

U.S. Direct Lending Portfolio Performance


(in thousands, except percentages, unaudited)	Q4 2022		Q3 2022		Q2 2022(2)		Q1 2022		Q4 2021(1)
Gross loans receivable
Revolving LOC	$	—	$	—	$	58,471	$	49,077	$	52,532
Installment loans	773,380		739,100		627,651		589,652		137,782
Total gross loans receivable (3)	$	773,380	$	739,100	$	686,122	$	638,729	$	190,314

Lending Revenue:
Revolving LOC	$	—	$	2,210	$	28,145	$	26,913	$	27,911
Installment loans (4)	88,001		90,834		169,878		162,824		104,168
Total lending revenue	$	88,001	$	93,044	$	198,023	$	189,737	$	132,079

Lending Provision:
Revolving LOC	$	—	$	—	$	11,831	$	9,577	$	11,592
Installment loans (5)	42,523		29,045		83,181		54,711		44,585
Total lending provision	$	42,523	$	29,045	$	95,012	$	64,288	$	56,177

NCOs (6)
Revolving LOC	$	—	$	1,140	$	10,248	$	10,055	$	11,481


(in thousands, except percentages, unaudited)	Q4 2022			Q3 2022			Q2 2022(2)		Q1 2022		Q4 2021(1)
Installment loans (7)	34,664			27,311			68,152		57,739		45,729
Total NCOs	$	34,664		$	28,451		$	78,400	$	67,794	$	57,210

NCO rate (annualized) (6) (8)
Revolving LOC	—%			15.6%			76.4%		79.2%		88.4%
Installment loans	18.4%			16.0%			44.8%		63.6%		132.8%
Total NCO rate (9)	18.4%			15.6%			44.0%		58.8%		97.6%

ALL rate (10)
Revolving LOC	—		%	—		%	25.1%		26.7%		25.9%
Installment loans	5.2		%	4.4		%	8.1%		5.4%		17.7%
Total ALL rate (11)	5.2		%	4.4		%	8.9%		6.6%		16.0%

31+ days past-due rate (10)
Revolving LOC	—		%	—		%	17.4%		19.1%		19.2%
Installment loans	9.9		%	10.5		%	20.5%		19.0%		19.0%
Total past-due rate(12)	9.9		%	10.5		%	10.1%		10.0%		9.7%

(1) On December 27, 2021, we acquired Heights Finance, which accounted for approximately $472 million of U.S. Direct Lending Installment loans as of December 31, 2021. As the period between December 27, 2021 and December 31, 2021 did not result in material loan performance, we have excluded Heights Finance from the table for the fourth quarter of 2021.

(2) Includes loan balances and activity classified as Held for Sale.

(3)Total combined gross loans receivable including receivables from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company were $737.4 million,$683.1 million and $236.6 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively, including installment loans – guaranteed by the Company of $51.3 million, $44.4 million and $46.3 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total Gross Combined Loans Receivable and installment loans – guaranteed by the Company are non-GAAP measures. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures.”

(4) Includes lending revenue from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $3.9 million,$48.3 million, $49.0 million and $47.3 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending Business.

(5) Includes provision from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $28.3 million, $21.7 million and $26.0 million for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending Business.

(6) NCOs presented above include $0.0 million, $0.5 million, $10.3 million and $5.0 million, for the three months ended December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively, related to the purchase accounting fair value discount, which are excluded from provision.

(7) Total NCOs included NCOs for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $1.6 million, $27.4 million, $21.5 million and $26.07 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending Business.

(8) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable, then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.

(9) Total NCO rate included the NCO rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 24.8%, 228.8%, 189.6% and 232.4% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending Business.

(10) We calculate (i) Allowance for loan losses (ALL) rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

(11)Total CSO liability for losses for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 0%, 15.7%, 16.1% and 14.9% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total U.S. Direct Lending ALL and CSO liability for losses rate was 8.9%, 6.6% and 16.0% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively.

(12) Total past-due rate included the past-due rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 2.6%, 4.5% and 3.1% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending Business.

Following is a summary of results of operations for the U.S. Direct Lending segment for the periods indicated.


	For the Year Ended December 31,
(dollars in thousands, unaudited)		2022		2021		2020
Revenue
Interest and fees revenue		$	568,807	$	511,711	$	623,507
Insurance premiums and commissions		31,594		275		—
Other revenue		15,321		13,976		15,017
Total revenue		615,722		525,962		$ 638,524
Provision for losses		240,578		166,033		230,164
Net revenue		375,144		359,929		408,360
Operating Expenses
Salaries and benefits		200,930		170,508		151,344
Occupancy		36,000		32,565		35,814
Advertising		27,038		33,223		40,702
Direct operations		38,306		35,899		39,112
Depreciation and amortization		18,094		12,005		12,992
Other operating expenses		63,076		54,508		35,357
Total operating expenses		383,444		338,708		315,321
Other expense (income)
Interest expense		119,955		72,543		63,413
Loss (income) from equity method investment		3,985		(3,658)		(4,546)
Gain from equity method investment		—		(135,387)		—
Goodwill impairment		107,827		—		—
Loss on extinguishment of debt		3,726		40,206		—
Gain on disposal of business		(68,443)		—		—
Total other expense (income)		167,050		(26,296)		58,867
Segment (loss) income before income taxes		$	(175,350)	$	47,517	$	34,172

U.S. Direct Lending Segment Results - For the Years Ended December 31, 2022 and 2021

Total Revenue.Total revenue increased $89.8 million, or 17.1%, compared to the prior-year period for the year ended December 31, 2022, primarily as a result of the acquisitions of Heights Finance in December 2021 and First Heritage in July 2022 and increases in revenue earned in 2022 by the Legacy U.S. Direct Lending Business prior to its divestiture in July 2022. Installment loan balances as of December 31, 2022 increased $635.6 million, or 461.3%, as a result of our acquisitions and divestiture. Following the sale of the Legacy U.S. Direct Lending Business, we no longer offer Revolving LOC loan products in the U.S. or guarantee loans originated by third party lenders through CSO programs.

Provision for Losses. The provision for losses increased $74.5 million, or 44.9%, for the year ended December 31, 2022, compared to the prior-year period, primarily as a result of the increase in U.S. Installment loan balances. Heights Finance and First Heritage offer higher balance, lower yield products that have lower charge off rates and delinquency rates compared to the Legacy U.S. Direct Lending Business. Total NCO rates (annualized) decreased 7,920 bps, or 81.1%, year over year and increased 280 bps, or 17.9%, sequentially due to the change in the composition of the U.S. Direct Lending business following the acquisitions and divestiture.

Operating Expenses. Operating expenses for the year ended December 31, 2022 were $383.4 million, an increase of $44.7 million, or 13.2%, compared to $338.7 million for the year ended December 31, 2021, primarily driven by the Salaries and benefits expense associated with a full year of consolidated Heights Finance results and partial year of First Heritage, partially offset by the divestiture of the Legacy U.S. Direct lending Business in July 2022. The Company experienced an increase in Depreciation and amortization expense of $6.1 million related to the amortization of intangible assets capitalized as part of the acquisitions of Heights Finance and First Heritage. Other operating expense increased by $8.6 million primarily due to costs incurred in the divestiture of the Legacy U.S. Direct Lending Business and the acquisition of First Heritage during 2022. These increases are partially offset by the $6.2 million decrease in Advertising expense which was primarily due to recurring advertising spending being higher on the Legacy U.S. Direct Lending Business as compared to the Heights Finance and First Heritage businesses.

Interest expense. Interest expense for the year ended December 31, 2022 increased $47.4 million, or 65.4%, compared to the prior-year period, primarily driven by (i) increased non-recourse ABL borrowing to support organic loan growth and acquired loans, including the ~~notes thereto,~~new $225 million non-recourse revolving warehouse facility to finance future loans originated by First Heritage and the ~~report~~new $425 million non-recourse revolving warehouse facility to replace our incumbent lender and finance future loans originated by Heights Finance, (ii) Senior Notes issued to fund in part our Heights Finance acquisition and (iii) an increase in benchmark rates on variable rate debt.

Equity method investment. We recorded a loss of $4.0 million for the year ended December 31, 2022 for our share of Katapult's loss. As of December 31, 2022, we own 19.5% of Katapult on a fully diluted basis (assuming full pay-out of earn-out shares), or 18.2% (excluding pay-out of earn-out shares). During the second quarter of 2021, Katapult became a public company via a SPAC merger, generating a pretax gain of $135.4 million in the year ended December 31, 2021.

Goodwill impairment. On October 1, 2022, management determined the estimated fair value of the ~~independent registered public accounting firm thereon~~U.S. Direct lending reporting unit did not exceed its carrying value. A two step analysis was performed to determine the amount of impairment for the U.S. Direct Lending reporting unit. The goodwill impairment charge unit was driven by rising interest rates, macroeconomic conditions and performance of recent acquisitions. As such, we recorded a pre-tax goodwill impairment charge of $107.8 million for the ~~other financial information included~~U.S. Direct Lending Reporting Unit.

Loss on extinguishment of debt. We recorded a $3.7 million loss on extinguishment of debt for the year ended December 31, 2022 related to the write off of deferred financing costs of debt facilities that we refinanced during 2022, as discussed in "—Interest expense" above. The Loss on extinguishment of debt for the year ended December 31, 2021 of $40.2 million was due to the redemption of the 8.25% Senior Secured Notes.

Gain on sale of business. We recorded a gain on sale of our Legacy U.S. Direct Lending Business of $68.4 million that occurred in July 2022.

Comparison of U.S. Direct Lending Segment Results of Operations for the Years Ended December 31, 2021 and 2020

For a comparison of our U.S. Direct Lending segment results of operations for the years ended December 31, 2021 and 2020, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Segment Analysis" in Part II Item 87 of ~~this~~our 2021 Form ~~10-K~~.10-K.

Year Ended December 31,
(in thousands, except per share amounts) 2017 2016 2015
Selected Income Statement Data:
Revenue $ 963,633
$ 828,596
$ 813,131
Gross Margin 349,237
293,256
238,601
Net income 49,153
65,444
17,769
Adjusted Net Income⁽²⁾
79,074
66,411
24,656
Diluted Earnings per Share⁽¹⁾
$ 1.25
$ 1.69
$ 0.46
Adjusted Diluted Earnings per Share ⁽¹⁾
$ 2.01
$ 1.71
$ 0.63
EBITDA⁽³⁾
193,250
191,260
120,006
Adjusted EBITDA⁽⁴⁾
232,215
189,361
130,876
Adjusted EBITDA Margin 24.1 % 22.9 % 16.1 %
Gross Margin Percentage 36.2 % 35.4 % 29.3 %
Weighted Average Shares - diluted⁽¹⁾
39,277
38,803
38,895
Selected Balance Sheet Data:
Gross Loans Receivable $ 432,837
$ 286,196
$ 252,180
Less: allowance for loan losses (69,568 ) (39,192 ) (32,948 )
Loans receivable, net $ 363,269
$ 247,004
$ 219,232
Total assets $ 859,731
$ 780,798
$ 666,017
Long-term debt 706,225
477,136
561,675
(1) The per share information has been adjusted to give effect to the 36-for-1 stock split that was effective on December 6, 2017.
(2) Adjusted Net Income is defined as Net income plus or minus certain non-cash or other adjusting items. We provide Adjusted Net Income in this Annual Report because our management finds it is useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted Net Income and how we use it, including a reconciliation of Net income to Adjusted Net Income, under “Supplemental Non-GAAP Financial Information” below.
(3) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. We provide EBITDA in this Annual Report because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of EBITDA and how we use it, along with a reconciliation of EBITDA to net income, under “Supplemental Non-GAAP Financial Information” below.
(4) Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, plus or minus certain non-cash or other adjusting items. We provide Adjusted EBITDA in this Annual Report because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted EBITDA and how we use it, along with a reconciliation of Adjusted EBITDA to net income, under “Supplemental Non-GAAP Financial Information” below.

Canada Direct Lending Portfolio Performance


(in thousands, except percentages, unaudited)	Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021
Gross loans receivable:
Revolving LOC	$	451,077		$	439,117		$	442,738		$	424,485		$	402,405
Installment loans	29,938			25,941			24,817			23,578			24,792
Total gross loans receivable	$	481,015		$	465,058		$	467,555		$	448,063		$	427,197

Lending Revenue:
Revolving LOC	$	49,915		$	50,251		$	47,591		$	45,455		$	43,943
Installment loans	12,434			12,645			11,868			11,109			11,416
Total lending revenue	$	62,349		$	62,896		$	59,459		$	56,564		$	55,359

Lending Provision:
Revolving LOC	$	29,620		$	28,408		$	22,641		$	19,156		$	20,080
Installment loans	3,919			4,466			3,303			2,723			2,945
Total lending provision	$	33,539		$	32,874		$	25,944		$	21,879		$	23,025






NCOs
Revolving LOC	$	26,715		$	23,652		$	20,160		$	21,590		$	15,112
Installment loans	3,504			4,061			2,904			2,647			2,758
Total NCOs	$	30,219		$	27,713		$	23,064		$	24,237		$	17,870

NCO rate (annualized) (1)
Revolving LOC	24.0		%	21.6%			18.4%			20.8%			3.9%
Installment loans	50.0		%	64.0%			48.0%			43.6%			11.2%
Total NCO rate	25.6		%	23.6%			20.0%			22.0%			4.4%






ALL rate (2)
Revolving LOC	8.4		%	7.9		%	7.2		%	7.2		%	8.0		%
Installment loans	10.4		%	10.3		%	9.7		%	8.8		%	8.0		%
Total ALL rate	8.5		%	8.0		%	7.4		%	7.3		%	8.0		%

31+ days past-due rate (2)
Revolving LOC	4.1		%	5.1		%	4.2		%	4.3		%	3.2		%
Installment loans	1.9		%	1.0		%	0.8		%	1.0		%	0.9		%
Total past-due rate	4.0		%	4.8		%	4.0		%	4.1		%	3.1		%








(1) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable; then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.
(2) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

Canada Direct Lending Results of Operations


	For the Year Ended December 31,
(dollars in thousands, unaudited)		2022		2021		2020
Revenue
Interest and Fees Revenue		$	241,268	$	199,735	$	164,681
Insurance Premiums and Commissions		54,561		48,714		35,553
Other Revenue		7,921		8,590		8,638
Total Revenue		303,750		257,039		$ 208,872
Provision for Losses		114,567		54,997		58,647
Net Revenue		189,183		202,042		150,225
Operating expenses
Salaries and Benefits		55,340		52,118		45,473
Occupancy		22,228		22,482		21,457
Advertising Expense		3,686		4,267		3,850
Direct Operations		11,053		9,777		7,781
Amortization and Depreciation		4,305		4,505		4,506
Other operating expenses		16,343		10,364		11,691
Total operating expenses		112,955		103,513		94,758
Other expense (income)
Interest Expense		25,065		9,798		9,296
Other Expense/Income		25,065		9,798		9,296
Segment income before income taxes		$	51,163	$	88,731	$	46,171

Canada Direct Lending Segment Results - For the Year Ended December 31, 2022 and 2021

Total Revenue.Canada Direct Lending total revenue increased $46.7 million, or 18.2%, ($58.6 million, or 22.8%, on a constant currency basis) compared to the prior-year period for the year ended December 31, 2022, primarily due to the organic growth of Revolving LOC and Installment loans in Canada. Gross loans receivable increased $53.8 million, or 12.6%, ($85.3 million, or 20.0%, on a constant currency basis) year over year.

Provision for Losses. The provision for losses increased $59.6 million, or 108.3%, ( $64.5 million, or 117.2%, on a constant currency basis) for the year ended December 31, 2022, compared to the prior-year period. The increase in provision for losses was primarily driven by (i) normalized provisioning on strong year-over-year loan growth as customer behavior returned to pre-COVID-19 levels, (ii) orderly credit normalization to higher NCO and past-due rates as COVID-19 impacts lessened compared to the same period in the prior year, and (iii) continued shift in online originations which have inherently more credit risk versus in-store originations. Fourth quarter NCO rates (annualized) increased 800 bps, or 45.5%, year over year and increased 200 bps, 8.5%, sequentially. Total past-due rates increased 90 bps year over year and decreased 87 bps sequentially.

Operating Expenses. Operating expenses were $113.0 million for the year ended December 31, 2022, an increase of $9.4 million, or 9.1%, ($13.9 million, or 13.5%, on a constant currency basis), compared to the prior-year period. The increase is primarily due to a $6.0 million ($6.9 million on a constant currency basis) increase in other operating expenses related to higher variable costs, largely collection and financial service fees, on higher volume.

Interest expense. Interest expense for the year ended December 31, 2022 was $25.1 million, compared to $9.8 million for the year ended December 31, 2021, due to increased non-recourse asset-backed lending borrowing from the Canada SPV facility to support organic loan growth and an increase in benchmark rates on variable rate debt.

Comparison of Canada Direct Lending Segment Results of Operations for the Years Ended December 31, 2021 and 2020

For a comparison of our Canada Direct Lending segment results of operations for the years ended December 31, 2021 and 2020, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Segment Analysis" in Part II Item 7 of our 2021 Form 10-K.

Canada POS Lending Portfolio Performance


(in thousands, except percentages, unaudited)	Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021
Revolving LOC
Total gross loans receivable	$	833,438		$	690,270		$	627,163		$	541,776		$	459,176


Total lending revenue	$	31,255		$	24,575		$	20,846		$	18,655		$	13,704


Total lending provision	$	17,125		$	13,379		$	5,963		$	8,714		$	12,511





NCOs (1)	$	8,672		$	6,114		$	3,537		$	2,727		$	1,731


NCO rate (annualized) (1)(2)	4.4		%	3.6		%	2.4		%	2.0		%	2.0		%





ALL rate (3)	4.9		%	4.8		%	4.5		%	5.1		%	4.8		%


31+ days past-due rate (3)	2.9		%	3.6		%	2.8		%	1.8		%	1.5		%








(1) NCOs presented above include $0.8 million for the three months ended December 31, 2021 of NCOs related to the purchase accounting fair value discount, which are excluded from provision.
(2) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable then we annualized the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.
(3) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

Canada POS Lending Results of Operations


	For the Year Ended December 31,
(dollars in thousands, unaudited)		2022		2021(1)
Revenue
Interest and fees revenue		$	95,332	$	32,289
Insurance premiums and commissions		2,335		421
Other revenue		8,779		2,132
Total revenue		106,446		34,842
Provision for losses		45,180		24,638
Net revenue		61,266		10,204
Operating expenses
Salaries and benefits		25,365		14,483
Occupancy		1,258		512
Advertising		1,420		1,272
Direct operations		14,768		14,380
Depreciation and amortization		13,923		10,445
Other operating expense		3,392		3,601
Total operating expenses		60,126		44,693
Other expense		(7,605)		—
Goodwill Impairment		37,414		—
Loss on Extinguishment of Debt		665		—
Interest expense		40,641		14,993
Total other expense		71,115		14,993
Segment loss before income taxes		$	(69,975)	$	(49,482)

(1) The totals reported for the year ended December 31, 2021 include results from the date of the Flexiti acquisition, March 10, 2021, through December 31, 2021.

Canada POS Lending Segment Results - For the Years Ended December 31, 2022 and 2021

Total Revenue.Total revenue increased year over year by $71.6 million, or 205.5% ($76.3 million, or 219.1%, on a constant currency basis) driven by year over year significant organic loan growth of $374.3 million, or 81.5% ($0.4 million, or 93.4%, on a constant currency basis). The increase in gross loans receivable was driven by growth associated with both existing and new merchant partners.

Provision for losses. The provision for losses increased $20.5 million, or 83.4% ($22.7 million, or 92.3%, on a constant currency basis) for the year ended December 31, 2022, compared to the prior-year period. The increase in provision for losses was primarily driven by organic loan growth, orderly credit normalization to higher NCO and past-due rates as COVID-19 impacts decreased comparatively and strategic loosening of certain credit approval metrics to include select near-prime customers. Total NCO rates for the fourth quarter of 2022 (annualized) increased to 4.4% from 2.0% year over year. Total past-due rates increased 144 bps year over year and decreased 61 bps sequentially.

Operating expenses. Operating expenses for the year ended December 31, 2022 were $60.1 million, an increase of $15.4 million, or 34.5% ($17.6 million, or 39.4%, on a constant currency basis) compared to $44.7 million for the year ended December 31, 2021. The increase was primarily driven by a $10.9 million increase in Salaries and benefits expense due to increased headcount to support higher loan volume year over year. Depreciation and amortization expense increased $3.5 million due to a full year of amortization of intangible assets capitalized upon the March 2021 acquisition of Flexiti.

Interest expense.Interest expense for the year ended December 31, 2022 increased $25.6 million, or 171.1%, compared to the prior-year period, primarily driven by increased non-recourse asset-backed lending borrowing to support significant loan growth and increased benchmark rates on variable debt prior to entering into interest rate swap agreements.

Goodwill impairment. On October 1, 2022, management determined the estimated fair value of the Canada POS Lending reporting unit did not exceed its carrying value. A two step analysis was performed to determine the amount of impairment for the Canada POS Lending reporting unit. The goodwill impairment charge unit was driven by rising interest rates, macroeconomic conditions and performance of recent acquisitions. As such, we recorded a pre-tax goodwill impairment charge of $37.4 million for the Canada POS Lending reporting unit.

Loss on extinguishment of debt. We incurred $0.7 million of debt extinguishment costs for the year ended December 31, 2022 related to the write off of deferred finance costs upon the September 2022 refinance of the Flexiti SPV.

Gain or loss on change in fair value of contingent consideration. We recorded a $7.6 million gain following a decrease in fair value of the Flexiti contingent consideration liability during the year ended December 31, 2022 compared to a $6.2 million loss following an increase in the fair value of Flexiti contingent consideration liability during the year ended December 31, 2021.

Results of Canada POS Lending Segment Results of Operations for the Year Ended December 31, 2021

For the results of our Canada POS Lending segment results of operations for the year ended December 31, 2021, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Segment Analysis" in Part II Item 7 of our 2021 Form 10-K. The company acquired Flexiti on March 10, 2021.

Supplemental Non-GAAP Financial Information

Non-GAAP Financial Measures

In addition to the financial information prepared in conformity with U.S. GAAP, we provide certain “non-GAAP financial ~~measures” as defined under SEC rules,~~measures,” including:

•Adjusted Net Income ("ANI") and Adjusted Diluted Earnings Per Share ~~or the Adjusted Earnings Measures~~ (net income plus or minus ~~gain (loss) on extinguishment of debt, restructuring~~certain legal and other costs, income or loss from equity method investment, goodwill and intangible asset impairments, transaction-related costs, restructuring costs, loss on extinguishment of debt, adjustments related to acquisition accounting, share-based compensation, intangible asset amortization, gain on sale of business, changes in fair value of contingent consideration, certain tax adjustments and cumulative tax effect of applicable adjustments, on a total and per share basis); and

~~EBITDA (earnings before interest, income taxes, depreciation and amortization);~~

~~Adjusted EBITDA (EBITDA plus or minus certain non-cash and other adjusting items); and~~

•Gross Combined Loans Receivable (includes loans originated by third-party lenders through CSO programs which are not included in ~~our consolidated financial statements)~~the Consolidated Financial Statements). As a result of the sale of the Legacy U.S. Direct Lending Business, we no longer guarantee loans originated by third-party lenders through CSO programs.

We believe that the presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of ~~our~~the business that, when viewed with our U.S. GAAP results, provide a more complete understanding of factors and trends affecting ~~our~~the business.

We believe that investors regularly rely on non-GAAP financial measures to assess operating performance and that such measures may highlight trends in ~~our~~the business that may not otherwise be apparent when relying on financial measures calculated in accordance with U.S. GAAP. WeIn addition, we believe that the adjustments shown below are useful to investors ~~in order~~ to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe ~~Adjusted Net Income, EBITDA and Adjusted EBITDA~~that these financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in our industry, many of which present ~~Adjusted Net Income, EBITDA and/or Adjusted EBITDA~~similar financial measures when reporting their results.

In addition to reporting loans receivable information in accordance with U.S. GAAP, we provide Gross Combined Loans Receivable consisting of owned loans receivable plus loans originated by third-party lenders through the CSO programs, which we historically guaranteed but did not include in the Consolidated Financial Statements. We believe this analysis provides investors with important information needed to evaluate overall lending performance. All balances in connection with the CSO programs were disposed of on July 8, 2022 with the completion of the divestiture of the Legacy U.S. Direct Lending Business.

We provide non-GAAP financial information for informational purposes and to enhance understanding of ~~our~~the U.S. GAAP ~~consolidated~~Consolidated Financial Statements. These financial ~~statements. Adjusted Net Income, EBITDA, Adjusted EBITDA and Gross Combined Loans Receivable~~measures should not be considered as alternatives to income, ~~from continuing operations~~segment operating income, or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with U.S. GAAP. ~~Rather, these measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results.~~ Readers should consider the information in addition to, but not instead of or superior to, ~~our~~the financial statements prepared in accordance with U.S. GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Description and Reconciliations of Non-GAAP Financial Measures

Adjusted ~~Earnings Measures, EBITDA~~Net Income and Adjusted ~~EBITDA~~Diluted Earnings per Share Measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our income or cash flows as reported under U.S. GAAP. ~~These~~Some of these limitations ~~include the following:~~are:

•they do not include ~~our~~ cash expenditures or future requirements for capital expenditures or contractual commitments;

•they do not include changes in, or cash requirements for, ~~our~~ working capital needs;

•they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on ~~our~~ debt;

•depreciation and amortization are non-cash expense items reported in ~~our~~the statements of cash flows; and

•other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures.

We evaluate our stores based on revenue per store, net charge-offs at each store and EBITDA per store, with consideration given to the length of time a store has been open and its geographic location. We monitor newer stores for their progress to profitability and their rate of revenue growth.

We believe EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and evaluate our ability to incur and service debt and our capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. The computation of Adjusted EBITDA as presented in our Management's Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report may differ from the computation of similarly-titled measures provided by other companies.

~~ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ("MD&A")~~

The following discussion of financial condition, results of operations, liquidity and capital resources, and certain factors that may affect future results, including economic and industry-wide factors, should be read in conjunction with our Consolidated Financial Statements and accompanying notes included herein. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Except as required by applicable law and regulations, we undertake no obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Please see the section titled “Risk Factors” in this Annual Report for a discussion of the uncertainties, risks and assumptions associated with these statements.

~~Overview~~

We are a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the United States, Canada and the United Kingdom and are a market leader in our industry based on revenues. We believe that we have the only true omni-channel customer acquisition, onboarding and servicing platform in our industry that is integrated across store, online, mobile and contact center touchpoints. Our IT platform, which we refer to as the “Curo Platform,” seamlessly integrates loan underwriting, scoring, servicing, collections, regulatory compliance and reporting activities into a single, centralized system. We use advanced risk analytics powered by proprietary algorithms and over 15 years of loan performance data to efficiently and effectively score our customers’ loan applications. Since 2010, we have extended $14.5 billion in total credit across approximately 38.1 million total loans, and our revenue of $963.6 million in 2017 represents a 24.8% compound annual growth rate, or CAGR, over the same time period.

We operate in the United States under two principal brands, “Speedy Cash” and “Rapid Cash,” and launched our new brand “Avio Credit” in the United States in the second quarter of 2017. In the United Kingdom we operate online as “Wage Day Advance” and "Juo Loans" and, prior to their closure in the third quarter of 2017, our stores were branded “Speedy Cash.” In Canada, our stores are branded “Cash Money” and we offer “LendDirect” installment loans online. As of December 31, 2017, our store network consisted of 407 locations across 14 U.S. states and seven Canadian provinces. As of December 31, 2017, we offered our online services in 27 U.S. states, five Canadian provinces, and the United Kingdom.

~~Recent Developments~~

We completed our initial public offering ("IPO") of 6,666,667 shares of common stock on December 11, 2017, at a price of $14.00 per share, which provided net proceeds of $81.1 million. In connection with the closing, the underwriters had a 30-day option to purchase up to an additional 1,000,000 shares at the initial public offering price, less the underwriting discount to over-allotments, which they exercised on January 5, 2018, which provided additional net proceeds of $13.0 million.

On February 5, 2018 CURO Financial Technologies Corp. (“CFTC”), a wholly-owned subsidiary of the Company, issued a notice of redemption for $77.5 million of its 12.00% Senior Secured Notes due 2022 (the “Notes,” and the transaction whereby the Notes are partially redeemed, the “Redemption”) that were issued by CFTC. The redemption was completed on March 7, 2018. The redemption price was equal to 112.00% of the principal amount of the Notes redeemed, plus accrued and unpaid interest paid thereon, to the date of redemption. Following the Redemption, $527.5 million of the original outstanding principal amount of the Notes remain outstanding. The Redemption was conducted pursuant to the Indenture governing the Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the Indenture, CFTC used a portion of the cash proceeds from the Company’s initial public offering, completed on December 11, 2017, to redeem such Notes.

~~Components of Our Results of Operations~~

~~Revenue~~

We offer a variety of loan products including Installment, Open-End and Single-Pay Loans. Revenue in our Consolidated Statements of Income includes: interest income, finance charges, CSO fees, late fees and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. Product offerings differ by jurisdiction and are governed by the laws in each separate jurisdiction.

Installment Loans are fully amortizing loans with a fixed payment amount due each period during the term of the loan. We record revenue from Installment Loans on a simple-interest basis. Accrued interest and fees are included in gross loans receivable in the Consolidated Balance Sheets.

Open-End Loans are a revolving line-of-credit with no defined loan term. We record revenue from Open-End Loans on a simple-interest basis. Accrued interest and fees are included in gross loans receivable in the Consolidated Balance Sheets.

Single-Pay Loans are primarily payday loans. Revenues from Single-Pay loan products are recognized each period on a constant-yield basis ratably over the term of each loan. We defer recognition of unearned fees based on the remaining term of the loan at the end of each reporting period.

We also provide a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt+), money transfer services, gold buying, credit protection insurance in the Canadian market, and retail installment sales.

~~Provision for Losses~~

We calculate ~~provision for losses based on evaluation of~~Adjusted Diluted Earnings per Share utilizing diluted shares outstanding at year-end. If the historical and expected cumulative net losses inherent in the underlying loan portfolios, by vintage, and several other quantitative and qualitative factors. We apply the resulting loss provision rate to our loan originations to determine the provision for losses. Accordingly, at the time we originate a loan, we recognizeCompany records a loss ~~on a portion~~under U.S. GAAP, shares outstanding utilized to calculate Diluted Earnings per Share are equivalent to basic shares outstanding. Shares outstanding utilized to calculate Adjusted Diluted Earnings per Share reflect the number of diluted shares the ~~loan balance based upon the applicable loss provision rate. We~~Company would then recognize any revenue in connection with that loan over the life of the loan, as described above. We may also record additional provision for losses for owned loans in connection with the periodic assessment of the adequacy of the allowance for loan losses.have reported if reporting net income under U.S. GAAP.

~~Q1 2017 Loss Recognition Change~~

patterns on early-stage versus late-stage delinquencies, we revised our estimates and now consider Installment Loans uncollectible when the loan has been contractually past-due for 90 consecutive days. Consequently, past-due Installment Loans and related accrued interest remain in loans receivable, with disclosure of past-due balances, for 90 days before being charged off against the allowance for loan losses. All recoveries on charged-off loans are credited to the allowance for loan losses. We evaluate the adequacy of the allowance for loan losses compared to the related gross loans receivable balances that include accrued interest.

In the income statement, the provision for losses for Installment Loans is based on assessment of the cumulative net losses inherent in the underlying loan portfolios, by vintage, and several other quantitative and qualitative factors. The resulting loss provision rate is applied to loan originations to determine the provision for losses. In addition to improving estimated collectability and loss recognition for Installment Loans, we also believe these refinements result in a loss provisioning methodology that is better aligned with industry comparisons and practices.

The aforementioned change was treated as a change in accounting estimate for accounting purposes and applied prospectively beginning January 1, 2017, which we refer to throughout this Annual Report as the Q1 Loss Recognition Change.

~~The change affects comparability to prior periods as follows:~~

As noted above, Gross Combined Loans Receivable—~~balances in 2017 include Installment Loans that are up to 90 days past-due with related accrued interest, while balances in prior periods do not include these loans.~~

~~Revenues~~—~~for the year ended December 31, 2017, revenues include accrued interest on past-due loan balances, while revenues in prior periods do not include these amounts.~~

~~Provision for Losses~~—prospectively, loans charged off on day 91 include accrued interest. Thus, provision rates in 2017 have been adjusted to include both principal and accrued interest. Additionally, because loss provision rates are applied to originations while charge-offs and recoveries are applied to the allowance for loan losses, provisioning is less affected by seasonality for the first quarter income tax refunds in the United States, which increases recoveries of delinquent balances.

~~For a full discussion of the change, see~~ ~~Note 1, “Summary of Significant Accounting Policies and Nature of Operations”~~ ~~in this Annual Report.~~

~~Hurricane Harvey Impact~~

In a good-faith effort to help our store and online customers in the affected areas of Houston, Corpus Christi and the surrounding areas we waived loan payments that were due during the period from August 25, 2017 to September 8, 2017. This affected approximately 22,500 customers and amounted to approximately $3.0 million in total loan payments. The waived payments and losses on secured installment loans in the market increased our provision for losses by approximately $3.3 million. Property damage to our 18 stores in the affected areas was not material. Our stores in the Texas markets resumed normal operations in September.

~~Cost of Providing Services~~

~~Salaries and Benefits~~

~~Salaries and benefits include personnel-related costs for our store operations, including salaries, benefits and bonuses and are driven by the number of employees.~~

~~Occupancy~~

~~Occupancy and equipment~~ includes ~~rent expense for our leased facilities, as well as depreciation, maintenance, insurance, and utility expense.~~

~~Office~~

~~Office includes expenses related to software, computer hardware, bank service charges, credit scoring charges and other office supplies.~~

~~Other Costs of Providing Services~~

~~Our other costs of providing services includes expenses related to operations such as processing fees, collections expense, security expense, taxes, repairs and professional fees.~~

~~Advertising~~

All advertising costs are expensed as incurred. Advertising includes costs associated with attracting, retaining and/or reactivating customers as well as creating awareness for the brands we promote. Creative, web and print design capabilities exist within the Company and are rarely outsourced. The use of third-party agencies is limited to mass-media production and placement. Advertising expense also includes costs for all marketing activities including paid search, advertising on social networking sites, affiliate programs, direct response television, radio air time and direct mail.

~~Operating Expense~~

~~Corporate, District and Other Expenses~~

Corporate, district and other expenses include costs such as salaries and benefits associated with our corporate and district-level employees, as well as other corporate-related costs such as rent, insurance, professional fees, utilities, travel and entertainment expenses and depreciation expense.

~~Interest Expense~~

~~Interest expense primarily includes interest related to our Notes and our SPV Facility.~~

~~Other Expenses~~

Other (income) and expense includes the foreign currency impact to our intercompany balances, gains or losses on foreign currency exchanges and disposals of fixed assets and other miscellaneous income and expense amounts.

~~Discussion of Revenue by Product and Segment and Related Loan Portfolio Performance~~

~~Revenue by Product~~

Unsecured and Secured Installment revenue includes interest income, CSO fees, and non-sufficient funds or returned-items fees on late or defaulted payments on past-due loans (to which we refer collectively as “late fees”). Late fees comprise less than one-half of one percent of Installment revenues.

~~Open-End revenues include interest income on outstanding revolving balances and other usage or maintenance fees as permitted by underlying statutes.~~

~~Single-Pay revenues represent deferred presentment or other fees as defined by the underlying state, provincial or national regulations.~~

~~The following table summarizes revenue by product, including CSO fees, for 2017 and 2016:~~

Year Ended Year Ended
December 31, 2017 December 31, 2016
(in thousands) U.S. Canada U.K. Total U.S. Canada U.K. Total
Unsecured Installment $ 435,745
$ 19,013
$ 25,485
$ 480,243
$ 318,460
$ 1,143
$ 11,110
$ 330,713
Secured Installment 100,981
—
—
100,981
81,453
—
—
81,453
Open-End 73,308
188
—
73,496
66,945
—
3
66,948
Single-Pay 107,553
147,617
13,624
268,794
117,609
173,779
21,888
313,276
Ancillary 20,142
19,591
386
40,119
22,332
13,155
719
36,206
Total revenue $ 737,729
$ 186,409
$ 39,495
$ 963,633
$ 606,799
$ 188,077
$ 33,720
$ 828,596

For full year 2017, total lending revenue (excluding revenues from ancillary products) grew $131.1 million, or 16.5%, to $923.5 million, compared to the prior year period. Growth was driven predominantly by Unsecured and Secured Installment loan revenue. Unsecured installment loan revenues rose 45.2% on related origination increase of 46.4%. Secured installment revenues increased 24.0% on related origination increase of 33.2%. Single-Pay revenues were affected primarily by regulatory changes in Canada (rate changes in Ontario and British Columbia and product changes in Alberta). U.S. and U.K. Single-Pay revenues also decreased 8.6% and 37.8%, respectively, because of continued mix shift from Single-Pay to Installment and Open-End products. Ancillary revenues increased 10.8% versus the same period a year ago primarily due to insurance revenue in Canada, partially offset by a decrease in check cashing fees. U.K. revenue increased $5.8 million, or 17.1% ($7.8 million or 23.0%, on a constant currency basis).

~~The following table summarizes revenue by product for 2016 and 2015:~~

Year Ended Year Ended
December 31, 2016 December 31, 2015
(in thousands) U.S. Canada U.K. Total U.S. Canada U.K. Total
Unsecured Installment $ 318,460
$ 1,143
$ 11,110
$ 330,713
$ 295,007
$ 322
$ 19,054
$ 314,383
Secured Installment 81,453
—
—
81,453
86,307
—
18
86,325
Open-End 66,945
—
3
66,948
51,304
—
7
51,311
Single-Pay 117,609
173,779
21,888
313,276
116,714
170,852
34,031
321,597
Ancillary 22,332
13,155
719
36,206
24,331
13,686
1,498
39,515
Total revenue $ 606,799
$ 188,077
$ 33,720
$ 828,596
$ 573,663
$ 184,860
$ 54,608
$ 813,131

Total lending revenue (excluding revenues from ancillary products) grew $18.8 million, or 2.4%, compared to the prior year, driven by growth in Installment and Open-End Loans. Unsecured Installment revenues rose 5.2% on related gross combined loan receivables growth of 29.0%, led by 7.9% growth in the United States (primarily in Texas, California and Missouri). U.K. Unsecured Installment revenues declined 41.7% because we discontinued a longer-term Installment Loan product in late 2015 due to regulatory changes. Secured Installment revenues decreased 5.6% mostly driven by competitive pressures in Nevada and Arizona. Open-End revenues grew 30.5% year-over-year primarily because in Kansas and Tennessee we replaced Single-pay products with Open-End products. Single-Pay revenues declined 2.6%. In the United States, the decline was primarily driven by the aforementioned changes in Kansas and Tennessee. Ancillary revenues were down 8.4% year-over-year primarily because secular declines in check usage continue to affect check-cashing revenues and we experienced tighter margins on foreign currency exchange. U.K. revenue comparisons are also affected meaningfully by a weaker pound. On a constant-currency basis, U.K. revenue declined $16.5 million, or 30.2%, compared to the prior year.

~~Loan Volume and Portfolio Performance Analysis~~

~~The following table summarizes Company-owned gross loans receivable, a GAAP balance sheet measure, and reconciles it to gross combined loans receivable, a non-GAAP measure including~~ loans originated by third-party lenders through CSO programs which are not included in the consolidated financial statements but from which we earn revenue and for which we provide a guarantee to the ~~lender:~~lender. All balances in connection with the CSO programs were disposed of on July 8, 2022 with the completion of the divestiture of the Legacy U.S. Direct Lending Business. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.

Three Months Ended
(in millions) December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016
Company-owned gross loans receivable $ 432.8
$ 393.4
$ 350.3
$ 304.8
$ 286.2
$ 244.6
$ 233.1
$ 220.7
Gross loans receivable guaranteed by the Company 78.8
71.2
62.1
57.8
68.0
58.7
52.6
45.4
Gross combined loans receivable $ 511.6
$ 464.6
$ 412.4
$ 362.6
$ 354.2
$ 303.3
$ 285.7
$ 266.1

~~The following table presents gross combined loans receivable~~We believe Adjusted Net Income and Adjusted Diluted Earnings per Share are used by ~~product:~~

~~Gross combined loans receivable were $511.6 million~~investors to analyze operating performance and ~~$354.2 million at December 31, 2017~~to evaluate our ability to incur and ~~2016, respectively. The increase was a result of Installment loan growth from higher originations~~service debt and the Q1 Loss Recognition Change. For 2017, Installment loans that are up to 90 days past due are included in gross combined loans receivable. Excluding the year-over-year effect of such past-due loans, gross combined loans receivable increased $83.4 million or 23.5% from December 31, 2016 to December 31, 2017.capacity for making capital expenditures.

~~Unsecured Installment Loans~~

Unsecured Installment revenue and gross combined loans receivable increased from the prior year quarter due to growth in the United States, primarily in Texas and California; growth in Canada, primarily in Alberta; and growth in the United Kingdom. Gross combined Unsecured Installment loan balances (excluding past due loans) grew~~$49.6 million, or 30.1%, compared to December 31, 2016.~~

Loss provision rates as a percentage of loan originations (or loss provision rates) for Company Owned loans increased sequentially from 21.1% to 22.1%, reflecting normal seasonal trends and allowance coverage evaluation. Fourth quarter 2017 provision rate was consistent with the prior year provision rate of 22.0%. The effect of of the Q1 Loss Recognition Change, which caused higher provision rates in 2017 was offset by improved underwriting and credit scoring, and seasoning.

Loss provision rates for loans Guaranteed by the Company decreased sequentially from 43.3% to 40.0%. This is primarily due to the impact of Hurricane Harvey relief during the third quarter of 2017 on Texas operations. Fourth quarter 2017 provision rates increased compared to the prior year quarter of 31.1%, primarily due to the Q1 Loss Recognition Change, which caused higher provision rates in 2017, as well as loan performance.

Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable and Unsecured Installment CSO guarantee liability as a percentage of Unsecured Installment gross loans Guaranteed by the Company both declined from the end of the third quarter of 2017. This was a result of realization of the impacts of Hurricane Harvey, seasonal patterns in net charge-offs and evaluation of year-end allowance coverage based on underlying vintage performance. Past-due Unsecured Installment gross loans receivable and Past-due Unsecured Installment gross loans Guaranteed by the Company remained consistent quarter over quarter.

2017 2016
(dollars in thousands, except average loan amount, unaudited) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter
Unsecured Installment loans:

Revenue - Company Owned $ 67,800
$ 61,653
$ 52,550
$ 51,206
$ 39,080
Provision for losses - Company Owned 29,917
29,079
17,845
19,309
24,557
Net revenue - Company Owned $ 37,883
$ 32,574
$ 34,705
$ 31,897
$ 14,523
Net charge-offs - Company Owned $ 32,894
$ 23,858
$ 18,858
$ (4,918 ) $ 18,836
Revenue - Guaranteed by the Company $ 69,078
$ 67,132
$ 52,599
$ 58,225
$ 55,234
Provision for losses - Guaranteed by the Company 32,915
36,212
23,575
19,940
22,364
Net revenue - Guaranteed by the Company $ 36,163
$ 30,920
$ 29,024
$ 38,285
$ 32,870
Net charge-offs - Guaranteed by the Company $ 31,898
$ 34,904
$ 27,309
$ 17,088
$ 21,144
Unsecured Installment gross combined loans receivable:

Company owned $ 196,306
$ 181,831
$ 156,075
$ 131,386
$ 102,090
Guaranteed by the Company ^{(1) (2)}
75,156
67,438
58,289
53,978
62,360
Unsecured Installment gross combined loans
receivable ^{(1) (2)}
$ 271,462
$ 249,269
$ 214,364
$ 185,364
$ 164,450
Unsecured Installment Allowance for loan losses ⁽³⁾
$ 43,755
$ 46,938
$ 41,406
$ 42,040
$ 17,775
Unsecured Installment CSO guarantee liability ⁽³⁾
$ 17,072
$ 16,056
$ 14,748
$ 18,482
$ 15,630
Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable 22.3 % 25.8 % 26.5 % 32.0 % 17.4%
Unsecured Installment CSO guarantee liability as a percentage of Unsecured Installment gross loans guaranteed by the Company 22.7 % 23.8 % 25.3 % 34.2 % 25.1%

Unsecured Installment past-due balances:

Unsecured Installment gross loans receivable ⁽⁴⁾
$ 44,963
$ 41,353
$ 33,534
$ 28,913
—
Unsecured Installment gross loans guaranteed by the Company ⁽⁴⁾
$ 12,480
$ 10,462
$ 8,204
$ 11,196
—
Past-due Unsecured Installment gross loans receivable -- percentage ^{(2) (4)}
22.9 % 22.7 % 21.5 % 22.0 % —
Past-due Unsecured Installment gross loans guaranteed by the Company -- percentage ^{(2) (4)}
16.6 % 15.5 % 14.1 % 20.7 % —
Unsecured Installment other information:

Originations-Company owned⁽⁵⁾
$ 135,284
$ 137,618
$ 119,636
$ 98,691
$ 111,412
Average loan amount - Company owned $ 714
$ 730
$ 697
$ 687
$ 646
Originations - Guaranteed by the Company ^{(1) (5)}
$ 82,326
$ 83,680
$ 68,338
$ 55,112
$ 71,858
Average loan amount - Guaranteed by the Company $ 526
$ 526
$ 485
$ 482
$ 478
Unsecured Installment ratios:

Provision as a percentage of originations - Company Owned 22.1 % 21.1 % 14.9 % 19.6 % 22.0 %
Provision as a percentage of gross loans receivable - Company Owned 15.2 % 16.0 % 11.4 % 14.7 % 24.1 %
Provision as a percentage of originations - Guaranteed by the Company 40.0 % 43.3 % 34.5 % 36.2 % 31.1 %
Provision as a percentage of gross loans receivable - Guaranteed by the Company 43.8 % 53.7 % 40.4 % 36.9 % 35.9 %
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Consolidated Balance Sheets.
(4) As part of the Q1 Loan Loss Recognition Change past-due receivables remain on our balance sheet until charged off. In all prior periods loans were written-off when a customer missed a scheduled payment.
(5) We have revised previously-reported origination statistics to conform to current year methodology.

~~Secured Installment Loans~~

Secured Installment loan revenue and gross combined loans receivable increased from the prior year due primarily to growth in California and Arizona. Gross combined Secured Installment loan balances (excluding past due loans) increased by $8.5 million, or 12.6%, compared to December 31, 2016, on higher origination volumes. Secured Installment Allowance for loan losses as a percentage of Secured Installment gross loans receivable settled at a more normalized range in the fourth quarter and improved slightly over the same quarter a year ago on underlying vintage performance. The Past-due Secured Installment gross loans receivable rate was consistent sequentially with third quarter.

2017 2016
(dollars in thousands, except average loan amount, unaudited) Fourth Quarter Third Quarter Second Quarter
First
Quarter
Fourth Quarter
Secured Installment loans:

Revenue $ 27,732
$ 26,407
$ 23,173
$ 23,669
$ 21,107
Provision for losses 10,051
6,512
4,955
7,436
7,159
Net revenue $ 17,681
$ 19,895
$ 18,218
$ 16,233

$ 13,948
Net charge-offs $ 10,802
$ 11,597
$ 6,481
$ (2,235 ) $ 6,588
Secured Installment gross combined loan balances:

Secured Installment gross combined loans receivable ⁽¹⁾⁽²⁾
$ 92,817
$ 88,730
$ 80,077
$ 71,213

$ 67,738
Secured Installment Allowance for loan losses and CSO guarantee liability⁽³⁾
$ 14,194
$ 14,945
$ 20,030
$ 21,557
$ 11,885
Secured Installment Allowance for loan losses and CSO guarantee liability as a percentage of Secured Installment gross combined loans receivable 15.3 % 16.8 % 25.0 % 30.3 %
17.5 %
Secured Installment past-due balances:

Secured Installment past-due gross loans receivable and gross loans guaranteed by the Company ⁽⁴⁾
$ 16,554
$ 15,265
$ 12,630
$ 10,186
—
Past-due Secured Installment gross loans receivable and gross loans guaranteed by the Company -- percentage ⁽²⁾⁽⁴⁾
17.8 % 17.2 % 15.8 % 14.3 % —
Secured Installment other information:

Originations ⁽¹⁾⁽⁵⁾
$ 48,577
$ 52,526
$ 45,596
$ 37,641
$ 43,803
Average loan amount ⁽¹⁾⁽⁵⁾
$ 1,303
$ 1,299
$ 1,231
$ 1,326
$ 1,197
Secured Installment ratios:

Provision as a percentage of originations 20.7 % 12.4 % 10.9 % 19.8 %
16.3 %
Provision as a percentage of gross combined loans receivable 10.8 % 7.3 % 6.2 % 10.4 %
10.6 %
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Consolidated Balance Sheets.
(4) As part of the Q1 Loan Loss Recognition Change past-due receivables remain on our balance sheet until charged off. In all prior periods loans were written-off when a customer missed a scheduled payment.
(5) We have revised previously-reported origination statistics to conform to current year methodology.

~~Open-End Loans~~

Open-End loan balances increased by $17.5 million, or 57.4%, compared to December 31, 2016, from year-over-year growth in Kansas and Tennessee of 21.3% and 24.2%, respectively, the 2017 launch of Open-End in Virginia ($6.2 million in balances at the end of 2017) and conversion in the fourth quarter of 2017 of LendDirect Unsecured Installment loans to Open-End in Canada ($7.2 million in balances at the end of 2017). The provision for losses and Open-End Allowance for loan losses as a percentage of Open-end gross loans receivable decreased due to improved collection trends and portfolio performance for existing markets, seasoning of the Tennessee loan book and the effect on mix of converting LendDirect to Open-End - as with our experience with other products in Canada, the LendDirect Open-End portfolio is expected to perform better relative to U.S. products.

2017 2016
(dollars in thousands, except average loan amount, unaudited) Fourth Quarter Third Quarter Second Quarter
First
Quarter
Fourth Quarter
Open-End loans:

Revenue $ 21,154
$ 18,630
$ 15,805
$ 17,907
$ 17,085
Provision for losses 8,334
6,348
4,298
3,265
6,283
Net revenue $ 12,820
$ 12,282
$ 11,507
$ 14,642
$ 10,802
Net charge-offs $ 6,799
$ 5,991
$ 4,343
$ 3,876
$ 6,085
Open-End gross combined loan balances:

Company owned $ 47,949
$ 32,133
$ 26,771
$ 25,626
$ 30,462
Allowance for loan losses $ 6,426
$ 4,880
$ 4,523
$ 4,572
$ 5,179
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable 13.4 % 15.2 % 16.9 % 17.8 % 17.0 %
Open-End other information:

Originations ⁽¹⁾
$ 20,313
$ 9,388
$ 6,646
$ 5,463
$ 9,880
Average loan amount ⁽¹⁾
$ 579
$ 463
$ 451
$ 454
$ 459
Open-End ratios:

Provision as a percentage of originations 41.0 % 67.6 % 64.7 % 59.8 % 63.6 %
Provision as a percentage of gross combined loans receivable 17.4 % 19.8 % 16.1 % 12.7 % 20.6 %
(1) We have revised previously-reported origination statistics to conform to current year methodology.

~~Single-Pay~~

Single-Pay revenue, provision and combined loans receivable during the three and twelve months ended December 31, 2017 were affected primarily by regulatory changes in Canada (rate changes in Ontario and British Columbia and product shift from Single-Pay to Installment in Alberta). Single-Pay revenue in the United States also declined compared to the prior year due to the continued shift toward Installment and Open-End products. The improvement in the provision for losses in the fourth quarter of 2017 as compared to the fourth quarter of 2016 was primarily due to a lower proportion of Single-Pay loans in the U.K. where loan loss rates are higher than in the U.S. and Canada.

2017 2016
(dollars in thousands, unaudited)
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter

Fourth
Quarter
Single-pay loans:
Revenue $ 70,868
$ 70,895
$ 63,241
$ 63,790
$ 77,617
Provision for losses 17,952
20,632
14,289
11,399
19,655
Net revenue $ 52,916
$ 50,263
$ 48,952
$ 52,391
$ 57,962
Net charge-offs $ 17,362
$ 20,515
$ 13,849
$ 12,499
$ 20,468
Single-Pay gross combined loan balances:

Single-Pay gross combined loans receivable ^{(1) (2)}
$ 99,400
$ 94,476
$ 91,230
$ 80,423
$ 91,579
Single-Pay Allowance for loan losses and CSO guarantee liability⁽³⁾
$ 5,915
$ 5,342
$ 5,313
$ 4,736
$ 5,775
Single-Pay Allowance for loan losses and CSO guarantee liability as a percentage of Single-Pay gross loans receivable 6.0 % 5.7 % 5.8 % 5.9 % 6.4 %
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Consolidated Balance Sheets.

~~Results of Operations - CURO Group Consolidated Operations~~

~~Condensed Consolidated Statements of Income~~

Year Ended December 31,
(dollars in thousands) 2017 2016 Change $ Change %
Consolidated Statements of Income Data:
Revenue $ 963,633
$ 828,596
$ 135,037
16.3 %
Provision for losses 326,226
258,289
67,937
26.3 %
Net revenue 637,407
570,307
67,100
11.8 %
Advertising costs 52,058
43,921
8,137
18.5 %
Non-advertising costs of providing services 236,112
233,130
2,982
1.3 %
Total cost of providing services 288,170
277,051
11,119
4.0 %
Gross margin 349,237
293,256
55,981
19.1 %
Operating (income) expense

Corporate, district and other 154,973
124,274
30,699
24.7 %
Interest expense 82,684
64,334
18,350
28.5 %
Loss (gain) on extinguishment of debt 12,458
(6,991 ) 19,449
#
Restructuring costs 7,393
3,618
3,775
#
Total operating expense 257,508
185,235
72,273
39.0 %
Net income before taxes 91,729
108,021
(16,292 ) (15.1 )%
Provision for income taxes 42,576
42,577
(1 ) — %
Net income $ 49,153
$ 65,444
$ (16,291 ) (24.9 )%
# - Variance greater than 100% or not meaningful.

Reconciliation of Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures (in thousands, except per share data)


	For the Year Ended December 31,
		2022		2021		2020
Net (loss) income from continuing operations		$	(185,484)	$	59,334	$	74,448
Adjustments:
Restructuring costs (1)		16,038		12,717		510
Legal and other costs (2)		1,489		2,134		2,415
Loss (income) from equity method investment (3)		3,985		(3,658)		(4,546)
Gain from equity method investment (4)		—		(135,387)		—
Transaction costs (5)		11,179		15,406		2,737
Acquisition-related adjustments (6)		(2,004)		13,949		—
Change in fair value of contingent consideration (7)		(7,605)		6,209		—
Loss on extinguishment of debt (8)		4,391		42,262		—
Share-based compensation (9)		13,956		13,976		12,910
Intangible asset amortization (10)		12,753		6,282		2,951
Gain on sale of business (11)		(68,443)		—		—
Goodwill impairment (12)		145,241		—		—
Cumulative tax effect of adjustments (13)		5,316		8,455		(4,534)
Canada GST adjustment (14)		—		—		2,160
Income tax valuations (15)		—		—		(3,472)
Impact of tax law changes (16)		—		—		(11,251)
Adjusted net (loss) income		$	(49,188)	$	41,679	$	74,328

Net (loss) income		$	(185,484)	$	59,334	$	74,448
Diluted weighted average shares outstanding		40,428		43,143		42,091
Adjusted diluted weighted average shares outstanding		40,428		43,143		42,091
Diluted (loss) earnings per share		$	(4.59)	$	1.38	$	1.77
Per share impact of adjustments to net income (loss)		3.37		(0.41)		—
Adjusted diluted (loss) earnings per share		$	(1.22)	$	0.97	$	1.77
Note: Footnotes follow Reconciliation of Net income table on the next page

Year Ended December 31,
(in thousands except per share data) 2017 2016 Change $ Change %
Net income $ 49,153
$ 65,444
$ (16,291 ) (24.9 )%
Adjustments:
Loss (gain) on extinguishment of debt ⁽¹⁾
12,458
(6,991 )
Restructuring costs ⁽²⁾
7,393
3,618

Legal settlement costs ⁽³⁾
4,311
—

Transaction-related costs⁽⁴⁾
5,573
329

Share-based cash and non-cash compensation⁽⁵⁾
10,446
1,148

Intangible asset amortization 2,502
3,492

Impact of tax law changes⁽⁶⁾
4,635
—

Cumulative tax effect of adjustments (17,397 ) (629 )
Adjusted Net Income $ 79,074
$ 66,411
$ 12,663
19.1 %

Net income $ 49,153
$ 65,444

Diluted Weighted Average Shares Outstanding 39,277
38,803

Diluted Earnings per Share $ 1.25
$ 1.69
$ (0.44 ) (26.0 )%
Per Share impact of adjustments to Net Income 0.76
0.02

Adjusted Diluted Earnings per Share $ 2.01
$ 1.71
$ 0.30
17.5 %


(1)			Restructuring costs primarily related to U.S. and Canada store closures and other cost saving initiatives.
(2)			Legal and other costs primarily related to settlement costs related to certain legal matters.
(3)			Share of Katapult's U.S. GAAP net income or loss, recognized on a one quarter lag.
(4)			Gain on investment in Katapult recorded as a result of the completion of its reverse merger with FinServ.
(5)			Transaction costs primarily related to the sale of the Legacy U.S. Direct Lending Business in July 2022, the acquisition of First Heritage in July 2022 and the acquisition of Heights Finance in December 2021.
(6)			During 2022, acquisition-related adjustments related to the Heights Finance and First Heritage acquisitions. During 2022 and 2021, acquisition-related adjustments related to the Flexiti acquisition.
(7)			Adjustments related to the fair value of the contingent consideration related to the acquisition of Flexiti.
(8)			On July 30, 2021, we entered into new 7.50% Senior Secured Notes due 2028, which were used on August 12, 2021 to extinguish the 8.25% Senior Secured Notes due 2025. During the three and nine months ended December 30, 2021, $40.2 million from the loss on the extinguishment of debt was due to the early redemption of the 8.25% Senior Secured Notes due 2025. An additional $2.1 million of interest was incurred for the year ended December 30, 2021, which represents interest on the 8.25% Senior Secured Notes due 2025 for the period between July 30, 2021 and August 12, 2021, the period during which the 8.25% Senior Secured Notes and 7.50% Senior Secured Notes were outstanding. During the year ended December 31, 2022,, $3.1 million of the loss on extinguishment of debt was due to the early extinguishment of the U.S. SPV on July 8, 2022 upon the completion of the divestiture of our Legacy U.S.Direct Lending business to Community Choice Financial, $0.6 million was due to the extinguishment of the Heights Finance SPV on July 15, 2022 and $0.7 million of the loss on extinguishment of debt was due to the Flexiti SPF loan settlement.
(9)			Estimated fair value of share-based awards was recognized as non-cash compensation expense on a straight-line basis over the vesting period.
(10)			Intangible asset amortization primarily included amortization of identifiable intangible assets established in connection with the acquisitions of Flexiti in March 2021, Heights Finance in December 2021 and First Heritage in July 2022.
(11)			Gain on the divestiture of its Legacy U.S. Direct Lending Business to Community Choice Financial in July 2022.
(12)			Goodwill impairment charge of $107.8 million recorded on the U.S. Direct Lending reporting unit and $37.4 million recorded on the Canada POS Lending reporting unit during the fourth quarter of 2022.
(13)			Cumulative tax effect of adjustments included in Reconciliation of Net (loss) income to Adjusted net (loss) income table is calculated using the estimated incremental tax rate by country.
(14)			We received a Notice of Adjustment from Canadian tax authority auditors in the second quarter 2020 related to the treatment of certain expenses in prior years for purposes of calculating the Goods and Services Tax ("GST") due.
(15)			During the year ended December 31, 2020, a Texas court ruling related to the apportionment of income to the state for an unrelated company resulted in a change in estimate regarding the realization of a tax benefit previously taken. Accordingly, we recorded a $1.1 million liability for our estimated exposure related to this position, which was settled in April 2021. Also in the year ended December 31, 2020, we released a $4.6 million valuation allowance related to Net Operating Losses ("NOLs") for certain entities in Canada.
(16)			On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was enacted by the U.S. Federal government in response to the COVID-19 pandemic. The CARES Act, among other things, allows NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. For the year ended December 31, 2020, we recorded an income tax benefit of $11.3 million related to the carryback of NOL from tax years 2018 and 2019.

~~Reconciliation of Net income to EBITDA and Adjusted EBITDA, non-GAAP measures~~

Year Ended December 31,
(dollars in thousands) 2017 2016 Change $ Change %
Net income $ 49,153
$ 65,444
$ (16,291 ) (24.9 )%
Provision for income taxes 42,576
42,577
$ (1 ) — %
Interest expense 82,684
64,334
$ 18,350
28.5 %
Depreciation and amortization 18,837
18,905
$ (68 ) (0.4 )%
EBITDA 193,250
191,260
$ 1,990
1.0 %
Loss (gain) on extinguishment of debt ⁽¹⁾
12,458
(6,991 )
Restructuring costs ⁽²⁾
7,393
3,618

Legal settlement costs ⁽³⁾
4,311
—

Transaction related costs⁽⁴⁾
5,573
329

Share-based cash and non-cash compensation ⁽⁵⁾
10,446
1,148

Other adjustments⁽⁷⁾
(1,216 ) (3 )
Adjusted EBITDA 232,215
189,361
42,854
22.6 %
Adjusted EBITDA Margin 24.1 % 22.9 %
(1) For the year ended December 31, 2017, the $12.5 million loss from extinguishment of debt was due to the redemption of CURO Intermediate Holdings' 10.75% Senior Secured Notes due 2018 and our 12.00% Senior Cash Pay Notes due 2017. For the year ended December 31, 2016, the $7.0 million gain resulted from the purchase of CURO Intermediate Holdings' 10.75% Senior Secured Notes in September 2016.
(2) Restructuring costs of $7.4 million for the year ended December 31, 2017 were due to the closure of the remaining 13 U.K. stores. Restructuring costs of $3.6 million for the year ended December 31, 2016 primarily represented the elimination of certain corporate positions in our Canadian headquarters and the costs incurred related to the closure of six underperforming stores in Texas.
(3) Legal settlements of $4.3 million for the year ended December 31, 2017 includes $2.3 million for the settlement of the Harrison, et al v. Principal Investment, Inc. et al., and $2.0 million for our offer to reimburse certain bank overdraft or non-sufficient funds fees because of possible borrower confusion about certain electronic payments we initiated on their loans. See litigation discussion in Note 18 - Contingent Liabilities in the Notes to our Consolidated Financial Statements for further detail.
(4) Transaction-related costs include professional fees paid in connection with certain potential and actual transactions.
(5) We approved the adoption of a share-based compensation plan during 2010 for key members of our senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. During the second and third quarters of 2017, option holders were paid a bonus in conjunction with the dividend paid during the respective quarter based on vested options as of the dividend date. The remaining bonus will be paid over the vesting period of the unvested stock options.
(6) As a result of the Tax Cuts and Jobs Act that was signed into law on December 22, 2017, we revalued our deferred tax assets and deferred tax liabilities to reflect expected value at utilization, resulting in a $3.5 million net tax benefit. In addition, in accordance with this law, we recognized an $8.1 million tax expense related to the tax now assessed on unrepatriated earnings from our Canada operations.
(7) Other adjustments include deferred rent and the foreign exchange translation impact of intercompany accounts. Deferred rent represents the non-cash component of rent expense. Rent expense is recognized ratably on a straight-line basis over the lease term.

~~Revenue and Net Revenue~~

Revenue increased $135.0 million, or 16.3% to $963.6 million for the year ended December 31, 2017 from $828.6 million for the prior year period. U.S. revenue increased $130.9 million on volume growth, the U.K. increased $5.8 million, and Canada decreased $1.7 million due to regulatory impacts on rates and product mix.

Provision for losses increased $67.9 million, or 26.3% to $326.2 million for the year ended December 31, 2017 from $258.3 million for the prior year because of higher origination volumes and higher loan balances.

~~Cost of Providing Services~~

The total cost of providing services increased $11.1 million, or 4.0%, to $288.2 million for the year ended December 31, 2017, compared to $277.1 million for the year ended December 31, 2016, due primarily to 18.5% higher marketing spend as well as increases in occupancy, office and other operating expenses.

~~Operating Expenses~~

Corporate, district and other expenses increased $30.7 million primarily due to debt extinguishment costs, share-based cash and non-cash compensation, IPO-related costs and legal settlement costs, as described above in the

~~reconciliation of Net Income to Adjusted Net Income, as well as increases in payroll, collections, office and technology-related costs.~~

Interest expense in the current year period increased by approximately $18.4 million which was the result of accrued interest on the retired notes through the redemption notice period and increased debt outstanding.

~~Provision for Income Taxes~~

The effective tax rate for the year ended December 31, 2017 was 46.4% compared to 39.4% for the prior year. As a result of the Tax Cuts and Jobs Act, the full year effective tax rate includes a net one-time charge of $3.9 million from adjustments to deferred tax assets and liabilities and recognition of tax expense related to Canadian earnings that have not been repatriated. Excluding the impact of the Tax Cuts and Jobs Act, the effective tax rate for full-year 2017 was 41.4%.

The remaining change in the effective tax rate from the prior year was primarily due to U.K. operations. The 2017 U.K. results include $7.4 million of restructuring costs related to the closure of the remaining 13 U. K. stores. We recorded a 100% valuation allowance against the resulting deferred tax asset and therefore did not recognize the related tax benefit.

~~Year Ended December 31, 2017 Compared with Year Ended December 31, 2016 - Segment Analysis~~

~~We report financial results for three reportable segments: the United States, Canada and the United Kingdom. Following is a recap of results of operations for the segment and period indicated:~~

U.S. Segment Results
Year Ended December 31,
(dollars in thousands) 2017 2016 Change $ Change %
Revenue $ 737,729
$ 606,798
$ 130,931
21.6 %
Provision for losses 267,491
207,748
59,743
28.8 %
Net revenue 470,238
399,050
71,188
17.8 %
Advertising costs 36,148
30,340
5,808
19.1 %
Non-advertising costs of providing services 166,875
164,382
2,493
1.5 %
Total cost of providing services 203,023
194,722
8,301
4.3 %
Gross margin 267,215
204,328
62,887
30.8 %
Corporate, district and other 120,803
88,539
32,264
36.4 %
Interest expense 82,495
64,276
18,219
28.3 %
Loss (gain) on extinguishment of debt 12,458
(6,991 ) 19,449
#
Restructuring and other costs —
1,726
(1,726 ) #
Total operating expense 215,756
147,550
68,206
46.2 %
Segment operating income 51,459
56,778
(5,319 ) (9.4 )%
Interest expense 82,495
64,276
18,219
28.3 %
Depreciation and amortization 13,643
13,196
447
3.4 %
EBITDA 147,597
134,250
13,347
9.9 %
Loss (gain) on extinguishment of debt 12,458
(6,991 ) 19,449

Restructuring and other costs —
1,726
(1,726 )
Legal settlement cost 4,311
—
4,311

Other adjustments (110 ) 128
(238 )
Transaction related costs 5,573
329
5,244

Share-based cash and non-cash compensation 10,290
1,148
9,142

Adjusted EBITDA $ 180,119
$ 130,590
$ 49,529
37.9 %
# - Variance greater than 100% or not meaningful.

Full year U.S. revenue grew by $130.9 million, or 21.6%, to $737.7 million. U.S. revenue growth was driven by a $49.4 million, or 18.0%, increase in gross combined loans receivable (excluding past due loans) to $323.6 million at December 31, 2017 compared to $274.2 million in the prior year period. We experienced strong volume growth in Unsecured Installment originations which increased year-over-year $131.9 million, or 27.4%. Secured Installment originations grew $45.9 million, or 33.2%, compared to the same period a year ago.

The increase of $59.7 million or 28.8% in provision for losses was primarily driven by the aforementioned increase in gross combined loans receivable and related origination volumes as well as the Q1 Loss Recognition Change.

U.S. cost of providing services for the year ended December 31, 2017 were $203.0 million, an increase of $8.3 million, or 4.3%, compared to $194.7 million for the year ended December 31, 2016. The increase was due primarily to $5.8 million, or 19.1% higher marketing spend, as well as increases in volume-driven expenses and increases in store security and maintenance costs.

~~All other U.S. operating expenses were $215.8 million for the year ended December 31, 2017, an increase of $68.2 million~~, or 46.2%, compared to $147.6 million in the prior year period. Excluding the effects of the items discussed previously in "Reconciliation of Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures" applicable to the U.S. as indicated in the Segment table above, Corporate, district and other operating expenses rose $13.6 million, or 15.6%, primarily due to increased technology and analytics headcount.

Canada Segment Results
Year Ended December 31,
(dollars in thousands) 2017 2016 Change $ Change %
Revenue $ 186,408
$ 188,078
$ (1,670 ) (0.9 )%
Provision for losses 45,075
39,917
5,158
12.9 %
Net revenue 141,333
148,161
(6,828 ) (4.6 )%
Advertising costs 10,415
8,695
1,720
19.8 %
Non-advertising costs of providing services 62,968
60,827
2,141
3.5 %
Total cost of providing services 73,383
69,522
3,861
5.6 %
Gross margin 67,950
78,639
(10,689 ) (13.6 )%
Corporate, district and other 16,952
17,174
(222 ) (1.3 )%
Interest expense 201
85
116
#
Restructuring and other costs —
898
(898 ) #
Total operating expense 17,153
18,157
(1,004 ) (5.5 )%
Segment operating income 50,797
60,482
(9,685 ) (16.0 )%
Interest expense 201
85
116
#
Depreciation and amortization 4,546
4,827
(281 ) (5.8 )%
EBITDA 55,544
65,394
(9,850 ) (15.1 )%
Restructuring and other costs —
898
(898 )
Share-based cash and non-cash compensation 156
—
156

Other adjustments (1,071 ) (373 ) (698 )
Adjusted EBITDA $ 54,629
$ 65,919
$ (11,290 ) (17.1 )%
# - Variance greater than 100% or not meaningful.

~~Revenue in Canada was affected by product transition in Alberta from Single-Pay loans to Unsecured Installment loans and the impact of regulatory rate changes in Ontario and British Columbia.~~

Non-Alberta Single-Pay revenue decreased $1.1 million, or 0.8% to $146.2 million for 2017 and was affected by lower rates from provincial regulatory changes effective January 1, 2017. The impact of the rate changes was offset by higher origination volumes resulting in a modest increase in related revenue. Single-Pay ending receivables (excluding Alberta) increased $9.1 million, or 20.9%, to $52.6 million from $43.5 million in the prior year period.

Because of regulatory changes in Alberta, we converted Single-Pay customers to Unsecured Installment loans during the first week of December 2016, resulting in $22.7 million of Unsecured Installment loans outstanding at the end of 2016. As of December 31, 2017, $43.7 million of Unsecured Installment and Open-End receivables were outstanding in Alberta.

The provision for losses rose $5.2 million or 12.9% to $45.1 million for full year 2017 compared to $39.9 million in the prior year period. As in the U.S., the increase was due to higher loan origination volume and the shift in Alberta from Single Pay to Unsecured Installment loans.

The cost of providing services in Canada increased $3.9 million, or 5.6%, to $73.4 million for the year ended December 31, 2017, compared to $69.5 million in the prior year period due primarily to an increase in occupancy expense, based on a higher number of stores in operation during 2017 as compared to the prior year, as well as an increase in store maintenance costs and higher marketing spend.

Operating expenses decreased $1.0 million, or 5.5%, to $17.2 million in the year ended December 31, 2017, from $18.2 million in the prior year period, due to the consolidation of certain back-office functions during the third quarter of 2016.

U.K. Segment Results
Year Ended December 31,
(dollars in thousands) 2017 2016 Change $ Change %
Revenue $ 39,496
$ 33,720
$ 5,776
17.1 %
Provision for losses 13,660
10,624
3,036
28.6 %
Net revenue 25,836
23,096
2,740
11.9 %
Advertising costs 5,495
4,886
609
12.5 %
Non-advertising costs of providing services 6,269
7,921
(1,652 ) (20.9 )%
Total cost of providing services 11,764
12,807
(1,043 ) (8.1 )%
Gross margin 14,072
10,289
3,783
36.8 %
Corporate, district and other 17,218
18,561
(1,343 ) (7.2 )%
Interest income (12 ) (27 ) 15
(55.6 )%
Restructuring and other costs 7,393
994
6,399
#
Total operating expense 24,599
19,528
5,071
26.0 %
Segment operating loss (10,527 ) (9,239 ) (1,288 ) 13.9 %
Interest income (12 ) (27 ) 15
(55.6 )%
Depreciation and amortization 648
882
(234 ) (26.5 )%
EBITDA (9,891 ) (8,384 ) (1,507 ) (18.0 )%
Other adjustments (35 ) 242
(277 )
Restructuring and other costs 7,393
994
6,399

Adjusted EBITDA $ (2,533 ) $ (7,148 ) $ 4,615
64.6 %
# - Variance greater than 100% or not meaningful

U.K. revenue improved $5.8 million, or 17.1%, to $39.5 million for the year ended December 31, 2017 from $33.7 million in the prior year period. On a constant currency basis, revenue was up $7.8 million, or 23.0%. Provision for losses increased $3.0 million, or 28.6%, and increased $3.7 million, or 34.5% on a constant currency basis, due to growth in Installment Loan receivables.

The cost of providing services in the United Kingdom decreased slightly from the prior year period because of third quarter 2017 store closures. On a constant currency basis the cost of providing services decreased $0.4 million, or 3.1%.

Operating expenses increased $5.1 million, or 26.0%, from the prior year period, and on a constant currency basis increased $6.3 million, or 32.4%, due to restructuring costs from closure of the 13 remaining stores during the third quarter of 2017. Excluding the store closure costs, operating expenses decreased $1.3 million, or 7.2%, because of reduced headquarters and contact center headcount and lower professional fees.

~~Results of Operations - CURO Group Consolidated Operations~~

~~Condensed Consolidated Statements of Income~~

Year Ended December 31,
(dollars in thousands) 2016 2015 Change $ Change %
Consolidated Statements of Income Data:
Revenue $ 828,596
$ 813,131
$ 15,465
1.9 %
Provision for losses 258,289
281,210
(22,921 ) (8.2 )%
Net revenue 570,307
531,921
38,386
7.2 %
Advertising costs 43,921
65,664
(21,743 ) (33.1 )%
Non-advertising costs of providing services 233,130
227,656
5,474
2.4 %
Total cost of providing services 277,051
293,320
(16,269 ) (5.5 )%
Gross margin 293,256
238,601
54,655
22.9 %
Operating expense
Corporate, district and other 124,274
130,534
(6,260 ) (4.8 )%
Interest expense 64,334
65,020
(686 ) (1.1 )%
Gain on extinguishment of debt (6,991 ) —
(6,991 ) #
Restructuring costs 3,618
4,291
(673 ) (15.7 )%
Goodwill and intangible asset impairment —
2,882
(2,882 ) #
Total operating expense 185,235
202,727
(17,492 ) (8.6 )%
Net income before taxes 108,021
35,874
72,147
#
Provision for income taxes 42,577
18,105
24,472
#
Net income $ 65,444
$ 17,769
$ 47,675
#
# - Variance greater than 100% or not meaningful.

~~Reconciliation of Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures~~

Year Ended December 31,
(in thousands except per share data) 2016 2015 Change $ Change %
Net income $ 65,444
$ 17,769
$ 47,675
#
Adjustments:
Gain on extinguishment of debt ⁽¹⁾
(6,991 ) —

  Restructuring costs ⁽²⁾
3,618
4,291

  Goodwill and intangible asset impairment⁽³⁾
—
2,882

  Transaction-related costs⁽⁴⁾
329
824

  Share-based cash and non-cash compensation⁽⁵⁾
1,148
1,271

  Intangible asset amortization 3,492
4,645

  Cumulative tax effect of adjustments (629 ) (7,026 )
    Adjusted Net Income $ 66,411
$ 24,656
$ 41,755
#

Net income $ 65,444
$ 17,769

Diluted Weighted Average Shares Outstanding 38,803
38,895

Diluted Earnings per Share $ 1.69
$ 0.46
$ 1.23
#
Per Share impact of adjustments to Net Income $ 0.02
$ 0.17

    Adjusted Diluted Earnings per Share $ 1.71
$ 0.63
$ 1.08
#
# - Variance greater than 100% or not meaningful.

~~Reconciliation of Net income to EBITDA and Adjusted EBITDA , non-GAAP measures~~

Year Ended December 31,
(dollars in thousands) 2016 2015 Change $ Change %
Net income $ 65,444
$ 17,769
$ 47,675
#
  Provision for income taxes 42,577
18,105
24,472
#
  Interest expense 64,334
65,020
(686 ) (1.1 )%
  Depreciation and amortization 18,905
19,112
(207 ) (1.1 )%
EBITDA 191,260
120,006
71,254
59.4 %
  Loss (gain) on extinguishment of debt ⁽¹⁾
(6,991 ) —

  Restructuring costs ⁽²⁾
3,618
4,291

  Goodwill and intangible asset impairment⁽³⁾
—
2,882

  Transaction related costs⁽⁴⁾
329
824

  Share-based cash and non-cash compensation⁽⁵⁾
1,148
1,271

  Other adjustments⁽⁶⁾
(3 ) 1,602

    Adjusted EBITDA $ 189,361
$ 130,876
$ 58,485
44.7 %
    Adjusted EBITDA Margin 22.9 % 16.1 %
# - Variance greater than 100% or not meaningful.
⁽¹⁾ For the year ended December 31, 2016, the $7.0 million gain resulted from the purchase of CURO Intermediate Holdings' 10.75% Senior Secured Notes in September 2016.
⁽²⁾ Restructuring costs for the year ended December 31, 2016 primarily represented the elimination of certain corporate positions in our Canadian headquarters and the costs incurred related to the closure of six underperforming stores in Texas. Restructuring costs in 2015 represented the expected costs to be incurred related to the closure of ten underperforming stores in the U.K.
⁽³⁾Goodwill and intangible asset impairment charges in 2015 include a non-cash goodwill impairment charge of $0.9 million and non-cash impairment charges related to the WageDay trade name intangible asset and customer relationship intangible asset of $1.8 million and $0.2 million, respectively.
⁽⁴⁾Transaction-related costs include professional fees paid in connection with potential transactions.
⁽⁵⁾ We approved the adoption of a share-based compensation plan during 2010 for key members of our senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period.
⁽⁶⁾ Other adjustments include deferred rent and the foreign exchange translation impact of intercompany accounts. Deferred rent represents the non-cash component of rent expense. Rent expense is recognized ratably on a straight-line basis over the lease term.

~~Revenue and Net Revenue~~

Revenue increased $15.5 million, or 1.9% to $828.6 million for the year ended December 31, 2016 from $813.1 million for the prior year. Volume growth in the United States and revenue growth in Canada driven by de novo store expansion and modest same-store volume growth, were partially offset by a decline in the U.K. revenue due to currency translation impact, product mix and volume changes, as well as the closure of nearly half of the U.K. stores in December 2015. A detailed discussion of results by segment is included in the Segment Analysis below.

Provision for losses decreased by $22.9 million, or 8.2% to $258.3 million for the year ended December 31, 2016 from $281.2 million for the prior year. Improved performance in the United States resulted from continuous refinements and improvements to scoring models, portfolio seasoning, and improve collection efforts. Lower relative customer acquisition spend in 2016 reduced the volume mix attributable to new customers compared to the same period a year ago. In the United Kingdom, loss provisions have improved because of tightened underwriting and seasoning. The increase in the provision for losses in Canada was due to the growth of newer bankline loan products, which have a higher provision rate as a percent of revenue than traditional Canadian single-pay products.

~~Cost of Providing Services~~

The total cost of providing services decreased $16.3 million, or 5.5%, to $277.1 million for the year ended December 31, 2016, compared to $293.3 million in the prior year primarily due to a decline in advertising expense of $21.7 million, or 33.1%, compared to the prior year, as we normalized customer acquisition in 2016 to maintain earning-asset levels but without the elevated levels of new customer investment of 2015. In addition, cost-per-funded loan improved significantly year-over-year so less total spend was necessary to drive similar customer volumes. Salaries and benefits also declined compared to the prior year driven by the closure of ten stores in the United Kingdom in December 2015. These declines were partially offset by an increase in other store operating expense which was attributable to higher collections costs, partially offset by a decline in store maintenance costs associated with store refurbishments that took place in the prior year.

~~Operating Expenses~~

Corporate, district and other expenses declined 4.8% in the year ended December 31, 2016 primarily because of U.K. store closures in 2015, a decrease in payroll costs at our U.K. corporate office, and declines in U.K. collections and office expense, as well as the impact of Canadian back-office consolidation during 2016, and the impact of certain intangible assets related to the 2011 Cash Money acquisition which became fully amortized. These declines were partially offset by an increase in U.S. corporate expense from higher payroll costs for additional headcount (primarily analytics and technology) and an increase in variable, performance based compensation, as well as an increase in professional fees and office expense.

Other changes in operating expenses were affected by a pretax gain of $7.0 million related to the discount on the repurchase of $25.1 million of CFTC’s outstanding May 2011 10.75% Senior Secured Notes, as well as $3.6 million of restructuring costs related to the elimination of certain positions, primarily Finance and IT, at our Canadian headquarters, and the closure of seven underperforming The Money Box stores in Texas, and one store in Missouri that we were unable to reopen after it was damaged by a fire, and costs related to the 2015 closure of ten U.K. stores.

Results in 2015 were also impacted by a $2.9 million non-cash goodwill and intangible asset impairment charges, and $4.3 million of costs related to the closure of ten U.K. stores mentioned above. These costs primarily consisted of adjustments to lease obligations associated with these locations.

~~Provision for Income Taxes~~

Our effective tax rate for the year ended December 31, 2016 was 39.4% compared to 50.5% for the year ended December 31, 2015. Our recorded income tax expense is affected by our mix of domestic and foreign earnings.

~~Year Ended December 31, 2016 Compared with Year Ended December 31, 2015 - Segment Analysis~~

~~We report financial results for three reportable segments: the United States, Canada and the United Kingdom. Following are a recap of results of operations for the segment and period indicated:~~

U.S. Segment Results
Year Ended December 31,
(dollars in thousands) 2016 2015 Change $ Change %
Revenue $ 606,798
$ 573,664
$ 33,134
5.8 %
Provision for losses 207,748
222,867
(15,119 ) (6.8 )%
Net revenue 399,050
350,797
48,253
13.8 %
Advertising costs 30,340
42,986
(12,646 ) (29.4 )%
Non-advertising costs of providing services 164,382
156,183
8,199
5.2 %
Total cost of providing services 194,722
199,169
(4,447 ) (2.2 )%
Gross margin 204,328
151,628
52,700
34.8 %
Corporate, district and other 88,539
82,518
6,021
7.3 %
Interest expense 64,276
64,910
(634 ) (1.0 )%
Gain on extinguishment of debt (6,991 ) —
(6,991 ) #
Restructuring and other costs 1,726
—
1,726
#
Total operating expense 147,550
147,428
122
0.1 %
Segment operating income 56,778
4,200
52,578
#
Interest expense 64,276
64,910
(634 ) (1.0 )%
Depreciation and amortization 13,196
12,110
1,086
9.0 %
EBITDA 134,250
81,220
53,030
65.3 %
Gain on extinguishment of debt (6,991 ) —
(6,991 )

Restructuring and other costs 1,726
—
1,726

Other adjustments 128
561
(433 )
Transaction-related costs 329
824
(495 )
Share-based cash and non-cash compensation 1,148
1,271
(123 )
Adjusted EBITDA $ 130,590
$ 83,876
$ 46,714
55.7 %
# - Variance greater than 100% or not meaningful.

~~Total revenue for our U.S. operations was $606.8 million for 2016, an increase of $33.1 million, or 5.8%, compared to the prior year. Revenue growth was driven by our online channel.~~

Gross margin for our U.S. operations for 2016 was $204.3 million, an increase of $52.7 million, or 34.8%, compared to the prior year. Gross margin as a percent of revenue improved to 33.7%, compared to 26.4% in the prior year from improvement in the provision for losses due to relative new customer mix and growth, related portfolio seasoning, and improved credit scoring and collection trends; as well as a $12.6 million decrease in advertising expense.

Operating expenses in the United States were flat with the prior year. An increase in corporate expense from higher payroll costs for additional headcount (primarily analytics and technology), an increase in variable, performance-based compensation, as well as an increase in professional fees and office expense, was more than offset by a $7.0 million gain on the extinguishment of $25.1 million of CFTC’s May 2011 10.75% Senior Secured Notes.

Canada Segment Results
Year Ended December 31,
(dollars in thousands) 2016 2015 Change $ Change %
Revenue $ 188,078
$ 184,859
$ 3,219
1.7 %
Provision for losses 39,917
37,317
2,600
7.0 %
Net revenue 148,161
147,542
619
0.4 %
Advertising costs 8,695
11,854
(3,159 ) (26.6 )%
Non-advertising costs of providing services 60,827
58,219
2,608
4.5 %
Total cost of providing services 69,522
70,073
(551 ) (0.8 )%
Gross margin 78,639
77,469
1,170
1.5 %
Corporate, district and other 17,174
21,112
(3,938 ) (18.7 )%
Interest expense 85
149
(64 ) (43.0 )%
Restructuring and other costs 898
—
898
#
Total operating expense 18,157
21,261
(3,104 ) (14.6 )%
Segment operating income 60,482
56,208
4,274
7.6 %
Interest expense 85
149
(64 ) (43.0 )%
Depreciation and amortization 4,827
5,203
(376 ) (7.2 )%
EBITDA 65,394
61,560
3,834
6.2 %
Restructuring and other costs 898
—
898

Other adjustments (373 ) 1,214
(1,587 )
Adjusted EBITDA $ 65,919
$ 62,774
$ 3,145
5.0 %
# - Variance greater than 100% or not meaningful.

Total revenue for our Canadian operations was $188.1 million for 2016, an increase of $3.2 million, or 1.7%, compared to the prior year. Growth in Canada was driven by our de novo store expansion and modest same-store volume growth in Ontario, Nova Scotia, British Columbia and Saskatchewan, which offset a $3.8 million, or 11.8%, decline in Alberta due to the statutory rate change.

The gross margin for our Canadian operations for 2016 was $78.6 million, an increase of $1.2 million, or 1.5%, compared to the prior year. Gross margin as a percent of revenue declined slightly in the current year to 41.8% from 41.9% for the prior year.

Operating expenses in Canada decreased $3.1 million, or 14.6%, from the prior year due primarily to the net impact of the elimination of 35 corporate positions in our Canadian headquarters (primarily finance and technology). Amortization expense also declined as certain intangible assets related to the 2011 Cash Money acquisition became fully amortized.

U.K. Segment Results
Year Ended December 31,
(dollars in thousands) 2016 2015 Change $ Change %
Revenue $ 33,720
$ 54,608
$ (20,888 ) (38.3 )%
Provision for losses 10,624
21,026
(10,402 ) (49.5 )%
Net revenue 23,096
33,582
(10,486 ) (31.2 )%
Advertising costs 4,886
10,824
(5,938 ) (54.9 )%
Non-advertising costs of providing services 7,921
13,254
(5,333 ) (40.2 )%
Total cost of providing services 12,807
24,078
(11,271 ) (46.8 )%
Gross margin 10,289
9,504
785
8.3 %
Corporate, district and other 18,561
26,904
(8,343 ) (31.0 )%
Interest income (27 ) (39 ) 12
30.8 %
Goodwill and impairment charges —
2,882
(2,882 ) #
Restructuring and other costs 994
4,291
(3,297 ) 76.8 %
Total operating expense 19,528
34,038
(14,510 ) 42.6 %
Segment operating loss (9,239 ) (24,534 ) 15,295
62.3 %
Interest income (27 ) (39 ) 12
(30.8 )%
Depreciation and amortization 882
1,799
(917 ) (51.0 )%
EBITDA (8,384 ) (22,774 ) 14,390
63.2 %
Other adjustments 242
(173 ) 415

Goodwill and impairment charges —
2,882
(2,882 )
Restructuring and other costs 994
4,291
(3,297 )
Adjusted EBITDA $ (7,148 ) $ (15,774 ) $ 8,626
54.7 %
# - Variance greater than 100% or not meaningful

Total revenue in the United Kingdom was $33.7 million for 2016, a decrease of $20.9 million, or 38.3%. The decline in the British Pound Sterling from an average exchange rate of $1.5282 for the year ended December 31, 2015 to an average exchange rate of $1.3552 for the year ended December 31, 2016, had a negative impact on our consolidated results. On a constant currency basis, revenue in the United Kingdom decreased $16.5 million, or 30.2%, compared to the prior year. Revenue declined in the United Kingdom because of product mix and volume changes, as well as the closure of nearly half of the U.K. stores in December 2015.

The gross margin for our U.K. operations for 2016 was $10.3 million, an increase of $0.8 million, or 8.3%, compared to the prior year. Gross margin as a percent of revenue improved to 30.5% compared to 17.4% in the prior year. Improvement in the provision for losses, lower advertising expense, and the impact of the closure of the ten stores to occupancy and salaries and benefits expense all contributed to gross margin improvement.

~~Store count~~

~~As of December 31, 2017, we had 407 stores in 14 U.S. states and seven provinces in Canada, which included the following:~~

214 U.S. locations: Texas (91), California (36), Nevada (18), Arizona (13), Tennessee (11), Kansas (10), Illinois (8), Alabama (7), Missouri (5), Louisiana (5), Colorado (3), Oregon (3), Washington (2), and Mississippi (2)

~~193 Canadian locations: Ontario (124), Alberta (27), British Columbia (26), Saskatchewan (6), Nova Scotia (5), Manitoba (4), and New Brunswick (1)~~

~~Online: We lend online in 27 states in the U.S., five provinces in Canada, and in England, Wales, Scotland and Northern Ireland in the United Kingdom.~~

From January 1, 2016 through December 31, 2017 we opened 11 stores: one store in the United States and 10 in Canada. During the same period we closed 24 stores: eight stores in Texas that were primarily underperforming former Money Box stores, one store in Missouri that we were unable to reopen due to fire damage, one store in Canada due to a lease that was not renewed, and the remaining 13 store locations in the United Kingdom as part of an overall plan to reduce operating losses in the wake of ongoing regulatory and market changes in the United Kingdom.

~~Store counts as of date are depicted below.~~

U.S. Canada U.K. Total
January 1, 2016 store count 223
184
13
420
De novo store openings 1
7
—
8
Closed stores (8 ) —
—
(8 )
December 31, 2016 store count 216
191
13
420
De novo store openings —
3
—
3
Closed stores (2 ) (1 ) (13 ) (16 )
December 31, 2017 store count 214
193
—
407

Currency Information

We operate in the ~~United States,~~U.S. and Canada and ~~the U.K. and report~~ our consolidated results are reported in U.S. dollars.

Changes in our reported revenues and net (loss) income include the effect of changes in currency exchange rates. ~~All balance sheet accounts are translated~~We translate the Consolidated Balance Sheet into U.S. dollars at the currency exchange rate in effect at the end of each period. ~~The income statement is translated~~We translate the Consolidated Statement of Operations at the average rates of exchange for the period. ~~Currency~~We record currency translation adjustments ~~are recorded~~ as a component of Accumulated ~~Other Comprehensive Income~~other comprehensive loss in ~~stockholders’ equity.~~Stockholders’ Equity.

Constant Currency Analysis

We have operations in the U.S.~~, Canada,~~ and ~~the U.K.~~Canada. For the ~~years~~year ended December 31, ~~2017~~2022 and ~~2016, approximately 23.4%~~2021, 40.0% and ~~26.8%~~35.7%, respectively, of our revenues were originated in ~~foreign currencies.~~Canadian Dollars. As a result, changes in our reported results include the impacts of changes in foreign currency exchange rates for the ~~respective currencies.~~Canadian Dollar.

~~Years Ended~~Income Statement


	For the Year Ended December 31,		For the Year Ended December 31,
		2022	2021		% Change		2021		2020		% Change
Average Exchange Rates for the Canadian Dollar		0.7689	$	0.7979	(3.6)	%	$	0.7979	$	0.7462	6.9	%

Balance Sheet - Exchange Rate as of December 31, ~~2017~~2022 and ~~2016~~

Average Exchange Rates
Year Ended December 31, Change
2017 2016 $ %
Canadian Dollar $ 0.7710
$ 0.7551

$0.0159
2.1 %
British Pound Sterling $ 1.2884
$ 1.3552

($0.0668 ) (4.9 )%

~~Years Ended~~ December 31, ~~2016 and 2015~~2021


	December 31,	December 31,	Change
	2022	2021	$	%
Exchange Rate for the Canadian Dollar	0.7365	0.7846	(0.0481)	(6.1)	%

Average Exchange Rates
Year Ended December 31, Change
2016 2015 $ %
Canadian Dollar $ 0.7551
$ 0.7832

($0.0281 ) (3.6 )%
British Pound Sterling $ 1.3552
$ 1.5282

($0.1730 ) (11.3 )%

~~As additional information, we have provided a~~The following constant currency analysis ~~below to remove~~removes the impact of the fluctuation in foreign exchange rates and ~~utilize~~utilizes constant currency results in our analysis of the Canada Direct Lending and Canada POS Lending segment performance. Our constant currency assessment assumes foreign exchange rates in the current fiscal periods remained the same as in the prior fiscal periods. All conversion rates below are based on the U.S. Dollar equivalent to ~~one of~~ the ~~applicable foreign currencies.~~Canadian Dollar. We believe that the constant currency assessment below is a useful measure in assessing the comparable growth and profitability of our operations.

~~The~~We calculated the revenues and gross margin below for our Canadian segments during the year ended December 31, ~~2017 were calculated~~2022 using the actual average exchange rate ~~for~~during the year ended December 31, ~~2016.~~2021 (in thousands).


	For the Year Ended December 31,
		2022		2021		$ Change		% Change
Canada Direct Lending – constant currency basis:
Revenues		$	315,655	$	257,039	$	58,616	22.8	%
Net revenue		196,179		202,042		(5,863)		(2.9)	%
Segment income before income taxes		52,574		88,731		(36,157)		(40.7)	%
Canada POS Lending – constant currency basis(1):
Revenues		$	111,163	34,842		$	76,321	219.0	%
Net revenue		63,788		10,204		53,584		525.1	%
Segment loss before income taxes		(74,135)		(49,482)		(24,653)		49.8	%
(1) The totals reported for the year ended December 31, 2021 include results from the date of acquisition, March 10, 2021, through December 31, 2021.

Year Ended December 31, Change
(dollars in thousands) 2017 2016 $ %
Revenues – constant currency basis:
Canada $ 182,295
$ 188,078
$ (5,783 ) (3.1 )%
United Kingdom 41,486
33,720
7,766
23.0 %
Gross margin - constant currency basis:
Canada $ 66,456
$ 78,639
$ (12,183 ) (15.5 )%
United Kingdom 14,788
10,289
4,499
43.7 %

~~The revenues and~~We calculated gross ~~margin~~loans receivable for our Canada segments below ~~for the year ended~~as of December 31, ~~2016 were calculated~~2022 using the actual ~~average~~ exchange rate ~~for the year ended~~as of December 31, ~~2015.~~2021 (in thousands).


	December 31,		December 31,		Change
	2022		2021		$		%
Canada Direct Lending – constant currency basis:
Gross loans receivable	$	512,454	$	427,197	$	85,257	20.0	%
Canada POS Lending – constant currency basis:
Gross loans receivable	$	887,911	$	459,176	$	428,735	93.4	%

LIQUIDITY AND CAPITAL RESOURCES

Year Ended December 31, Change
(dollars in thousands) 2016 2015 $ %
Revenues – constant currency basis:
Canada $ 194,974
$ 184,859
$ 10,115
5.5 %
United Kingdom 38,110
54,608
(16,498 ) (30.2 )%
Gross margin - constant currency basis:
Canada $ 81,447
$ 77,469
$ 3,978
5.1 %
United Kingdom 11,518
9,504
2,014
21.2 %

~~Liquidity and Capital Resources~~

Our principal sources of liquidity to fund the loans we make to our customers are (i) cash provided by operations and (ii) our ~~Senior Revolver,~~revolving credit facilities and our non-recourse funding facilities, as further described in Note 6 , "Debt" of the Notes to the Consolidated Financial Statements. Historically, we also used funds from ~~third party~~third-party lenders under our CSO ~~programs, and our Non-Recourse~~programs. As a result of the sale of the Legacy U.S. ~~SPV Facility, which finances the originations of eligible U.S. Unsecured and Secured Installment Loans at an advance rate of 80%. In February 2017,~~Direct Lending Business on July 8, 2022, we issued 12.00% Senior Secured Notes to refinance similar notes that were nearing maturity and whose proceeds had been used primarily for acquisitions and general corporate purposes. As of December 31, 2017, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. no longer guarantee loans originated by third-party lenders through CSO programs.

We anticipate that our primary use of cash will be to fund growth in our working capital, finance capital expenditures to further our business strategy in both the U.S. and Canada and meet our debt obligations. We may also use cash for potential strategic investments in and acquisitions of other companies that help us extend our reach and product portfolio. Additionally, we may use cash to fund a return on capital for our stockholders through share repurchase programs or in the form of dividends. Our Board of Directors authorized a $25.0 million share repurchase program in February 2022, under which no shares have been repurchased to date. Refer to Note 23 , "Share Repurchase Program" of the Notes to the Consolidated Financial Statements for further details of the program. The Board of Directors suspended the quarterly dividend payment in October 2022.

Our level of cash flow provided by operating activities typically experiences ~~some~~ seasonal ~~fluctuation~~fluctuations related to our levels of net income and changes in working capital levels, particularly loans receivable.

Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party financing or could increase our borrowing costs in the future. We have the ability to adjust our volume of lending to consumers ~~which would reduce cash outflow requirements while increasing cash inflows through loan repayments~~ to the extent we experience any short-term or long-term funding ~~shortfalls.~~ shortfalls, such as tightening our credit approval practices (as we did during the COVID-19 pandemic), which has the effect of reducing cash outflow requirements while increasing cash inflows through loan repayments.

We may also sell or securitize our assets, draw on our available revolving credit ~~facility~~facilities or ~~line~~lines of credit, enter into additional refinancing agreements ~~and~~or reduce our capital spending ~~in order~~ to generate additional liquidity. The impacts to cash as described in "—Cash Flows" below and other factors resulted in our available unrestricted cash on hand of $73.9 million as of December 31, 2022. We believe our cash on hand and available borrowings provide us with sufficient liquidity for at least the next ~~twelve~~12 months.

~~Borrowings~~

Our ~~long-term debt consisted~~recent acquisitions of ~~the following as of December 31, 2017~~First Heritage and ~~2016 (net of deferred financing costs):~~

December 31,
(dollars in thousands) 2017 2016
12.00% Senior Secured Notes (due 2022) $ 585,823
$ —
May 2011 Senior Secured Notes (due 2018) —
223,164
May 2012 Senior Secured Notes (due 2018) —
89,734
February 2013 Senior Secured Notes (due 2018) —
101,184
February 2013 Cash Pay Notes (due 2017) —
124,365
Non-Recourse U.S. SPV Facility 120,402
63,054
ABL Facility —
23,406
Senior Revolver —
—
Total long-term debt, including current portion 706,225

624,907
Less: current maturities of long-term debt —
147,771
Long-term debt $ 706,225

$ 477,136

~~Available Credit Facilities and Other Resources~~

~~12.00% Senior Secured Notes~~

On February 15, 2017 CURO issued $470.0 million 12.00% Senior Secured Notes due March 1, 2022 ("12.00% Senior Secured Notes"). Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the 12.00% Senior Secured Notes were used, together with available cash,Heights Finance have increased our product offerings to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly-owned subsidiary, CURO Intermediate, (ii) redeem our outstanding 12.00% Senior Cash Pay Notes due 2017, or the Senior Cash Pay Notes and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. The extinguishment of all of the 10.75% Senior Secured Notes due 2018 and the Senior Cash Pay Notes resulted in a pretax loss of $12.5 million in 2017.

~~In connection with this debt issuance we capitalized financing costs of approximately $14.0 million, the balance of which are included~~include additional customers in the ~~Consolidated Balance Sheets as a component~~near-prime and prime space. The acquisition of ~~“Long-Term Debt,”~~First Heritage and ~~are being amortized over the term of the 12.00% Senior Secured Notes and included as a component of interest expense.~~

On November 2, 2017, CFTC issued $135.0 million principal amount of additional 12.00% Senior Secured Notes in a private offering exempt from the registration requirements of the Securities Act, or the Additional Notes Offering. The proceeds from the Additional Notes Offering were used, together with available cash, to (i) pay a cash dividend in an amount of $140.0 million to us, CFTC's sole stockholder, and ultimatelyHeights Finance completed our ~~stockholders and (ii) pay fees, expenses, premiums and accrued interest in connection with the Additional Notes Offering. CFTC received the consent of holders holding a majority~~strategic transition in the ~~outstanding principal amount outstanding of the current 12.00% Senior Secured Notes~~U.S. toward longer term, higher balance and lower rate credit products and provides us with access to a ~~one-time waiver with respect to the restrictions contained in Section 5.07(a) of the indenture governing the 12.00% Senior Secured Notes to permit the dividend.~~

The 12.00% Senior Secured Notes rank senior in right of payment to all of our and our guarantor entities’ existing and future subordinated indebtedness and equal in right of payment with all our and our guarantor entities’ existing and future senior indebtedness, including borrowings under our revolving credit facilities. The 12.00% Senior Secured Notes and the guarantees are effectively subordinated to our credit facilities and certain other

~~indebtedness to the extent of the value of the assets securing such indebtedness and to liabilities of our subsidiaries that are not guarantors.~~

The 12.00% Senior Secured Notes are secured by liens on substantially all of our and the guarantors’ assets, subject to certain exceptions. On or after March 1, 2019, we may redeem some or all of the Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any to the applicable date of redemption. Prior to March 1, 2019, we will be able to redeem up to 40% of the Notes at a redemption price of 112% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date with the net cash proceeds of certain equity offerings. Prior to March 1, 2019, subject to certain terms and conditions, we may redeem the Notes, in whole or in part, by paying a “make-whole” premium plus accrued and unpaid interest to the redemption date.

On March 7, 2018, we used a portion of the net proceeds from the IPO to redeem $77.5 million of the 12.00% Senior Secured Notes due 2022 and to pay related fees, expenses, premiums and accrued interest. See Note 25 - Subsequent Events of this Annual Report on Form 10-K for additional information about this transaction.

~~Non-Recourse U.S. SPV Facility and ABL Facility~~

On November 17, 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the “SPV Borrower”) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides for an $80.0 million term loan and $45.0 million of initial revolving borrowing capacity, with the abilitylarger addressable market while mitigating regulatory risk. These initiatives to expand ~~such revolving borrowing capacity over time~~our product offerings and ~~an automatic expansion~~grow the U.S. and Canadian businesses could materially impact our future cash flows. For further information regarding the acquisitions, refer to ~~$70.0 million on the six-month anniversary~~Note 1, "Summary of ~~the closing date May 17, 2017 (our “Non-Recourse U.S. SPV Facility”). On November 17, 2016, Intermediate entered into a six-month recourse credit facility with Victory Park Management, LLC~~Significant Accounting Policies and ~~certain other lenders (the "ABL Facility") which provided for $25.0 million~~Nature of ~~borrowing capacity. This facility matured in May 2017~~Operations," and ~~was repaid through the sale of the underlying collateral to the Non-Recourse U.S. SPV Facility. See~~ Note 11 ~~- "Long-Term Debt" of our notes to the Consolidated Financial Statements for further detail.~~

~~Senior Revolver~~

On September 1, 2017, we closed a $25 million Senior Secured Revolving Loan Facility (the "Senior Revolver"). The negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for our 12.00% Senior Secured Notes. We believe this facility complements our other financing sources, while providing seasonal short-term liquidity. Under the Senior Revolver, there is $25.0 million maximum availability, including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR (which may not be negative) plus 5.00% per annum14,"Acquisitions and is repayable on demand. The terms of the Senior Revolver require that the outstanding balance be reduced to $0 for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries of CURO that guarantee our 12.00% Senior Secured Notes and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing our 12.00% Senior Secured Notes. The Senior Revolver was undrawn at December 31, 2017.

In February 2018, the Senior Revolver capacity was increased to $29.0 million as permitted by the Indenture to the Senior Secured Notes based upon consolidated tangible assets. The Senior Revolver is now syndicated with participation by a second bank.

In connection with this facility we capitalized financing costs of approximately $0.1 million, the balance of which are included in the Consolidated Balance Sheets as a component of “Other assets,” and are being amortized over the term of the facility and included as a component of interest expense.

~~Cash Money Revolving Credit Facility~~

Cash Money Cheque Cashing, Inc., one of our Canadian subsidiaries, maintains a C$7.3 million revolving credit facility with Royal Bank of Canada. The Cash Money Revolving Credit Facility provides short-term liquidity required to meet the working capital needs of our Canadian operations. Aggregate draws under the revolving credit facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and (ii) C$7.3 million. As of December 31, 2017, the borrowing capacity under our revolving credit facility was reduced by C$0.3 million in stand-by-letters of credit.

The Cash Money Revolving Credit Facility is collateralized by substantially all of Cash Money’s assets and contains various covenants that include, among other things, that the aggregate borrowings outstanding under the facility not exceed the borrowing base, restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Cash Money Revolving Credit Facility bear interest (per annum) at the prime rate of a Canadian chartered bank plus 1.95%.

~~The Cash Money Revolving Credit Facility was undrawn at December 31, 2017 and December 31, 2016.~~

~~Balance Sheet Changes - December 31, 2017 compared to December 31, 2016~~

~~Cash~~ - Cash decreased from 2016 primarily because of cash used in the redemption and refinancing of the Company's 12.00% Senior Cash Pay Notes due 2017 and CURO Intermediate’s 10.75% Senior Secured Notes due 2018 ("Former Senior Secured Notes"). On February 15, 2017, CFTC issued $470.0 million of 12.00% Senior Secured Notes due 2022. The proceeds, along with $122.5 million of company cash, were used to redeem the $539.9 million outstanding Former Senior Secured Notes (including accrued interest, prepayment penalties, transaction costs and the original-issue discount). The decrease in cash from this refinancing was offset partially by cash generated by operations during 2017 and net proceeds after transaction costs of $81.1 million from our initial public offering of 6,666,667 shares of common stock at a price of $14.00 per share. On November 2, 2017, CFTC issued $135.0 million of additional 12.00% Senior Secured Notes due 2022. The proceeds of the notes offering and related issuance premium were used to pay a $140.0 million cash dividend to the Company and, ultimately, the Company's stockholders.

~~Restricted Cash~~ – Restricted cash increased from 2016 year end because of increased cash in our consolidated wholly-owned, bankruptcy remote special purpose subsidiaries, or VIEs, from underlying installment loan volume growth.

~~Gross Loans Receivable and Allowance for Loan Losses~~ - We originated $780.7 million and $184.3 million of Unsecured and Secured Installment Loans, respectively, during 2017 as compared to $533.4 million and $138.4 million in the prior year. As explained in the Loan Volume and Portfolio Performance Analysis section above, changes in Gross Loans Receivable and related Allowance for Loan Losses were due to high customer demand and loan origination volumes during 2017 that were concentrated in Installment Loans.

~~Other Assets~~ - Other assets increased primarily because of the equity investment in Cognical Holdings, Inc. We made a $5.0 million investment on April 20, 2017 and an additional $0.6 million investment in October 2017 that increased the Company's equity ownership from 8.9% to 9.4%. Cognical Holdings, Inc. operates as a business under an online website, www.zibby.com, that facilitates the purchase of household items by underbanked consumers.

~~Long-term debt (including current maturities) and Accrued Interest~~ - Changes from year-end 2016 are due to the refinancing of the Former Senior Secured Notes, the conversion of the ABL Facility to the Non-Recourse U.S. SPV Facility and the issuance of additional 12.00% Senior Secured Notes due 2022 in November 2017. See ~~Note 11 Long-Term Debt~~Divestiture" of the Notes to the Consolidated Financial ~~Statements~~Statements.

As of December 31, 2022, we were in compliance with or have received waivers of all financial ratios, covenants and other requirements in our debt agreements. These waivers are temporary and management expects to extend the waivers and renegotiate related covenants. If we do not reach an agreement, we will be in default under certain debt agreements.

We have no additional material commitments or demands that are likely to affect our liquidity.

Debt Capitalization Summary

(in thousands, except capacity, net of deferred financing costs)

Capacity

Interest Rate

Maturity

Balance as of December 31, 2022 (in USD)

7.50% Senior Secured Notes (due 2028) (2)

$1.0 billion

7.50%

August 1, 2028

982,934

Heights SPV

$425.0 million

1-Mo SOFR + 4.25%

July 15, 2025

393,181

First Heritage SPV

$225.0 million

1-Mo SOFR + 4.25%

July 13, 2025

178,622

Flexiti SPV(1)

C$535.0 million

Weighted average interest rate (3)(5) 8.33%

September 29, 2025

339,651

Flexiti Securitization(1)

C$526.5 million

1-Mo CDOR + 3.59%)(5)

December 9, 2025

385,054

Canada SPV(1)

C$400.0 million

3-Mo CDOR + 6.00%

August 2, 2026

292,872

Curo Canada Revolving Credit Facility(1)(4)

C$5.0 million

Canada Prime Rate + 1.95%

January 6, 2023

—

Senior Revolver

$40.0 million

1-Mo SOFR + 5.00%

August 31, 2023

35,000

(1) Capacity amounts are denominated in Canadian dollars, while outstanding balances as of December 31, 2022 are denominated in U.S. dollars.

(2) On July 30, 2021, we closed our $750 million aggregate principal amount of new 7.50% Senior Secured Notes, which was used to redeem our $690.0 million 8.25% Senior Secured Notes due 2025. On December 27, 2021, we issued an additional $250.0 million of our 7.50% Senior Secured Notes for a total capacity of $1.0 billion.

(3) The weighted average interest rate does not include the impact of the amortization of deferred loan origination costs or debt discounts.

(4) On December 21, 2022 the maximum amount of the CURO Canada Revolving Credit Facility was reduced from C$10.0million to C$5.0 million, and the facility was cancelled in its entirety on January 6, 2023.

(5) Swapped to fixed rate via interest rate swap hedging arrangement that terminates on September 29, 2025 for Flexiti SPV and December 9, 2025 for Flexiti Securitization.

Refer to Note 6 , "Debt," for ~~a detailed discussion~~details on each of ~~changes in debt balances.~~our credit facilities and resources.

Cash Flows

The following highlights our cash flow activity and the sources and uses of funding during the periods ~~indicated:~~indicated (in thousands):


	For the Year Ended December 31,
	2022		2021		2020
Net cash provided by continuing operating activities	$	284,607	$	323,173	$	403,505
Net cash used in investing activities	(777,949)		(923,488)		(255,056)
Net cash provided by financing activities	501,062		491,291		7,329

Year Ended December 31,
(dollars in thousands) 2017 2016 2015
Net cash provided by operating activities $ 17,410
$ 47,712
$ 17,114
Net cash used in investing activities (19,332 ) (12,922 ) (26,255 )
Net cash (used in) provided by financing activities (36,691 ) 59,382
(12,321 )

Years Ended December 31, ~~2017~~2022 and ~~2016~~2021

~~Cash flows from~~Operating Activities

Net cash provided by operating activities

~~During~~ for the year ended December 31, ~~2017 our operating activities provided~~2022 was $284.6 million, which is primarily attributable to the effect of non-cash reconciling items of $505.7 million offset by net ~~cash~~loss of ~~$17.4 million. Contributing to current year net cash provided by operating activities were net income of $49.2~~$185.5 million, and ~~non-cash expenses, such as depreciation and amortization, the provision for loan losses, and a loss on debt extinguishment for a total of $376.5 million, partially offset by~~ changes in our operating assets and liabilities of ~~$408.3~~$35.6 million. ~~The most significant change within~~Our non-cash reconciling items of $505.7 million primarily included $400.3 million of provision for losses, $145.2 million of goodwill impairment expense recorded on the U.S. Direct Lending and Canada POS Lending segments, and $36.3 million of depreciation and amortization, offset by the gain on the disposal of our Legacy U.S. Direct Lending Business of $68.4 million and deferred income tax benefit of $38.3 million. Our changes in operating assets and liabilities ~~was~~of $35.6 million were primarily related to $46.6 million of lower accounts payable and accrued liabilities as a ~~$435.5~~result of timing on the settlement of certain accruals and $37.3 million of lower accrued interest on our gross loans receivable offset primarily by an increase in ~~loans~~deferred revenue of $17.8 million and $17.9 million of lower Income taxes receivable.

Loans receivable will fluctuate from period to period depending on the timing of loan issuances and collections. A seasonal decline in consumer loans receivable typically takes place during the first quarter of the year and is driven by income tax refunds in the United States. Customers receiving income tax refunds will use the proceeds to pay outstanding loan balances, resulting in an increase of our net cash balances and a decrease of our consumer loans receivable balances. Consumer loans receivable balances typically reflect growth during the remainder of the year.Investing Activities

~~Cash flows from investing activities~~

During the year ended December 31, 2017, we used cash of $19.3 million to increase our restricted cash balances by approximately $4.0 million, to purchase approximately $9.8 million of property and equipment, including software licenses, and to purchase $5.6 million of Cognical Holdings preferred shares. The increase in restricted cash was primarily attributable to our Non-Recourse U.S. SPV Facility.

~~Cash flows from financing activities~~

Net cash used in investing activities for the year ended December 31, ~~2017~~2022 was ~~$36.7~~$777.9 million, primarily due to net origination of loans of $890.1 million. ~~We extinguished our 10.75% Senior Secured Notes for $426.0 million (which included $8.9~~In addition, we used cash to purchase $45.8 million of ~~call premium)~~property, equipment and ~~extinguished our Senior Cash Pay Notes for $130.1 million. These payments were partially financed by proceeds~~software, an increase from the prior year due to the acquisitions of ~~$447.6 million (net of $14.0~~Flexiti and Heights Finance in 2021 and First Heritage in 2022. We also utilized $131.0 million of ~~debt issuance costs~~cash to acquire First Heritage and ~~$8.5~~received $289.0 million of ~~discount on notes issued) from~~cash for the ~~issuance~~sale of the ~~12.00% Senior Secured Notes due 2022. On November 2, 2017, CFTC issued $135.0 million~~Legacy U.S. Direct Lending Business, net of additional 12.00% Senior Secured Notes due 2022. The proceeds of this notes offering and related issuance premium were used to pay a $140.0 million dividend to the Company and, ultimately, the Company's stockholders. We paid total dividends of $182.0 million to our stockholders during 2017. Our initial public offering of 6,666,667 shares of common stock at a price of $14.00 per sharecash.

Financing Activities

Net cash provided ~~net proceeds after transaction costs of $81.1 million. We also had net borrowings of $32.9 million from our U.S. SPV Facility and our ABL Facility.~~

~~Years Ended December 31, 2016 and 2015~~

~~Cash flows from operating~~by financing activities

~~During~~ for the year ended December 31, ~~2016~~2022 was $501.1 million primarily due to $549.6 million of net proceeds from our ~~operating activities provided net cash of $47.7 million, compared to $17.1 million in net cash used in operating activities during the year ended December 31, 2015. Contributing to~~

net cash provided by operating activities in 2016 were net income of $65.4 million, and non-cash expenses, such as depreciation and amortization, the provision for loan losses, and a benefit related to deferred income taxes, of $278.7 million; non-cash restructuring costs of $0.5 million,non-recourse debt facilities partially offset by ~~a $7.0~~(i) $12.5 million ~~non-cash benefit from a gain on debt extinguishment and a $290.0 million net decrease~~of share repurchases in cash resulting from changes in operating assets and liabilities. The most significant change within operating assets and liabilities was a $287.8 million increase in loans receivable, net of provision for losses.

~~Loans receivable will fluctuate from period to period depending on the timing of loan issuances and collections. A seasonal decline in consumer loans receivable typically takes place during~~ the first quarter of ~~the year~~2022 and ~~is driven by income tax refunds in the United States. Customers receiving income tax refunds will use the proceeds to pay outstanding loan balances, resulting in an increase~~(ii) $13.7 million of cash dividends.

Years Ended December 31, 2021 and 2020

For a comparison of our ~~net~~ cash ~~balances and a decrease of our consumer loans receivable balances. Consumer loans receivable balances typically reflect growth during~~flows for the ~~remainder of the year.~~

~~Cash flows from investing activities~~

~~During the year~~years ended December 31, ~~2016, we used net cash~~2021 and 2020, see "Management's Discussion and Analysis of ~~$16.0 million for the purchase~~Financial Condition and Results of ~~property and equipment, including software licenses, partially offset by a $3.1 million decrease~~Operations—Cash Flows" in our restricted cash balance. This compared to $26.3 million in net cash used in investing activities during the year ended December 31, 2015. The growth in property and equipment was driven primarily by capital expenditures associated with new store openings in Canada, store refreshes in the United States, and expenditures for software licenses. For the year ended December 31, 2016, we also received £1.4 million ($1.9 million) of funds previously placed in a collateral account with a U.K. banking institution, and received $4.0 million of funds previously placed in a collateral account with a U.S. banking institution. As a result of the borrowings from the Non-Recourse U.S. SPV Facility, approximately $2.8 million of cash was restricted.

~~Cash flows from financing activities~~

During the year ended December 31, 2016, net cash provided by financing activities was $59.4 million, compared to $12.3 million in net cash used in financing activities during the year ended December 31, 2015. The change was primarily due to $91.7 million of proceeds received from new borrowings from our newly created Non-Recourse U.S. SPV Facility and ABL Facility. In addition, we incurred additional deferred financing costs associated with this debt. During the year ended December 31, 2016, CURO Intermediate used cash of $18.9 million to purchase $25.1 million of outstanding May 2011 10.75% Senior Secured Notes at 71.25% of the principal, plus accrued and unpaid interest of $1.0 million via an open-market purchase. During the year, we also received proceeds from draws on our credit facilities of $30.0 million, and repaid $38.1 million of the outstanding balance of borrowings on our credit facilities. Borrowings under our credit facilities provided us with short-term liquidity and were used for working capital requirements and to fund capital expenditures.

~~Contractual Obligations~~

Contractual obligations include agreements that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. For obligations with cancellation provisions, the amounts included in the following table were limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee.

The expected timing of payments of the obligations below is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on the timing of receipt of goods or services, or changes to agreed-upon amounts for some obligations.

~~The following table summarizes our significant contractual obligations and commitments as of December 31, 2017:~~

(in thousands) Payments due by period
Total Less than 1 year 1-3 years 3-5 years More than 5 years
Debt obligations ⁽¹⁾
$ 729,590
$ —
$ —
$ 729,590
$ —
Interest on debt obligations ⁽¹⁾
385,195
87,535
175,070
122,590
—
Operating lease obligations 118,916
26,316
42,864
30,420
19,316
Service contracts 8,310
4,212
4,098
—
—
$ 1,242,011
$ 118,063
$ 222,032
$ 882,600
$ 19,316
⁽¹⁾ This does not reflect the impact of the redemption of $77.5 million of 12.00% Senior Secured Notes on March 7, 2018, which will reduce Debt obligations due in 3-5 years by $77.5 million and Interest on debt obligations due in Less than 1 year by $4.7 million, due in 1-3 years by $18.6 million, and due in 3-5 years by $14.0 million.

On February 15, 2017, CFTC issued $470.0 million of 12.00% Senior Secured Notes. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the notes and available cash were used to (i) redeem 10.75% Senior Secured Notes due 2018Part II Item 7 of our ~~subsidiary, CURO Intermediate, (ii) redeem our 12.00% Senior Cash Pay Notes due 2017, and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering.~~

On September 1, 2017, we closed a $25.0 million Senior Secured Revolving Loan Facility, or the Senior Revolver. The negative covenants of the Senior Revolver generally conform to the related provision of the Indenture dated February 15, 2017 for our 12.00% Senior Secured Notes and complements our other financing sources, while providing seasonal short-term liquidity. The Senior Revolver was undrawn at December 31, 2017.

On November 2, 2017, CFTC issued $135.0 million principal amount of additional 12.00% Senior Secured Notes in a private offering exempt from the registration requirements of the Securities Act, or the Additional Notes Offering. We used the proceeds from the Additional Notes Offering, together with available cash, to (i) pay a cash dividend, in an amount of $140.0 million, and (ii) pay fees and expenses, in connection therewith. CFTC received the consent of the holders holding a majority in the outstanding principal amount outstanding of the current 12.00% Senior Secured Notes to a one-time waiver with respect to the restrictions contained in Section 5.07(a) of the indenture governing the 12.00% Senior Secured Notes to permit the dividend.

We entered into operating lease agreements for the buildings in which we operate that expire at various times through 2030. The majority of the leases have an original term of five years with two 5-year renewal options. Most of the leases have escalation clauses and several also require payment of certain period costs including maintenance, insurance and property taxes. For additional information concerning our operating leases, see Note 19, "Operating Leases" of the Notes to Consolidated Financial Statements in this Annual Report on2021 Form 10-K.

~~Off-Balance Sheet Arrangements~~

We originate loans in all of our store locations and online, except for our operations in Texas and Ohio. In these states, we operate as a Credit Services Organization, or CSO, through three of our operating subsidiaries. Our CSO program in Texas is licensed as a Credit Access Business, or CAB, under Texas Finance Code Chapter 393 and regulated by the Texas Office of the Consumer Credit Commissioner. Our CSO program in Ohio is registered under the Credit Services Organization Act, Ohio Revised Code Sections 4712.01 to 4712.99, and regulated by the Ohio Department of Commerce Division of Financial Institutions. As a CAB, we charge our customers a CSO fee for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customer’s obligation to repay the loan the customer receives from the third-party lender if the customer fails to do so. For CSO loans, each lender is responsible for providing the criteria by which the customer’s application is underwritten and, if approved,

determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans, if they go in to default. Since the loans are made by a third-party lender, they are not included in our Consolidated Balance Sheets as loans receivable.

As of December 31, 2017, the maximum amount payable under all such guarantees was $65.2 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover some or the entire amount from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the creditworthiness of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. The guarantee liability was $17.8 million at December 31, 2017 and $17.1 million at December 31, 2016, respectively.

Additionally, we enter into operating leases in the normal course of business. Our operating lease obligations are discussed in Note 19 - "Operating Leases" of our Notes to Consolidated Financial Statements.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with ~~generally accepted accounting principles~~U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates. We consider the following accounting policies to be critical in understanding our historical and future performance and require management's most subjective and complex judgments.

~~Current and Past-Due Loans Receivable~~Allowance for Loan Losses

~~We classify our loans receivable as either current or past-due. Single-Pay and Open-End Loans~~Credit losses are ~~considered past-due when a customer misses a scheduled payment, and it is charged-off to the allowance for loan losses. The charge-off~~an inherent part of ~~Unsecured Installment and Secured Installment Loans was impacted by a change in accounting estimate in 2017.~~

Effective January 1, 2017, we modified the timeframe in which Installment Loans are charged-off and made related refinements to our loss provisioning methodology. Prior to January 1, 2017, we deemed all loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. Because of our continuing shift from Single-Pay to Installment Loan products and analysis of the timing and quantity of payments on early-stage versus late-stage delinquencies, we revised our estimates and now consider Installment Loans uncollectible when the loan has been past-due for 90 consecutive days. Consequently, past-due Installment Loans remain in loans receivable, with disclosure of past-due balances, for 90 days before being charged-off against the allowance for loan losses. Subsequently, all recoveries on charged-off loans are credited to the allowance for loan losses.

In the income statement, the provision for losses for Installment Loans is based on an assessment of the cumulative net losses inherent in the underlying loan portfolios, by vintage, and other quantitative and qualitative factors. The resulting loss provision rate is applied to loan originations to determine the provision for losses. In addition to improving estimated collectability and loss recognition for Installment Loans, we also believe these refinements are better aligned with industry comparisons and practices.

The aforementioned change was treated as a change in accounting estimate and is being applied prospectively, effective January 1, 2017. As a result, some credit quality metrics for 2017 may not be comparable to historical periods. Throughout the remainder of this report, we refer to the change as the Q1 Loss Recognition Change.

~~Installment Loans generally are considered past-due when a customer misses a scheduled payment. Loans zero to 90 days past-due are included in gross~~outstanding loans receivable. We ~~accrue~~maintain an ALL for loans and interest receivable at a level we estimate to be adequate to absorb incurred losses based primarily on ~~past-due loans until charged off. The amount~~our analysis of ~~the resulting~~historical loss or charge-off ~~includes unpaid principal, accrued interest and any uncollected fees, if applicable. Consequently, net loss~~ rates ~~that include accrued interest will be higher than under the methodology applied prior to January 1, 2017.~~

In addition to the revised loss provision rates to accommodate the change in estimate, $61.0 million of past-due Installment Loans were included in gross loans receivable as of December 31, 2017. Before the Q1 Loss Recognition Change, no past-due loans were included in gross loans receivable.

~~Allowance for Loan Losses~~

~~The allowance for loan losses is primarily based on back-testing of subsequent collections history~~ by ~~product and cumulative aggregate net losses by product and by vintage. We do not specifically reserve for any individual loan but rather segregate loans into separate pools based upon loan portfolios~~products containing similar risk characteristics. ~~Additional quantitative factors, such~~The ALL on our gross loans receivables reduces the outstanding gross loans receivables balance in the Consolidated Balance Sheets. We record increases in the allowance, net of charge-offs and recoveries, as ~~current default~~“Provision for losses” in the Consolidated Statements of Operations. We adopted CECL as of January 1, 2023, which requires a broader range of reasonable and supportable information to inform credit loss estimates. See "Recently Issued Accounting Pronouncements Not Yet Adopted" in Note 1, "Summary of Significant Policies and Nature of Operations for more information."

We also consider delinquency trends ~~past-due account roll rates (expected future cash collections by past-due aging category~~as well as macro-economic conditions we believe may affect portfolio losses. If a loan is deemed to be uncollectible before it is fully reserved based on ~~current trends) and changes to underwriting and portfolio mix are also considered in evaluating the adequacy~~information we become aware of ~~the allowance and current provision rates.~~(e.g., receipt of customer bankruptcy notice or death), we charge off such loan at that time. Qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions impact management’s judgment on the overall adequacy of the allowance for loan losses.

~~In addition to the effect~~ Any recoveries on Installment provision rates and loan balances, the Q1 Loss Recognition Change affected comparability of activity in the related allowance for loan losses. Specifically, no Unsecured Installment or Secured Installment Loans were charged-offloans previously charged to the allowance are credited to the allowance when collected.

Business Combinations and Contingent Consideration

We include the results of operations of acquired businesses from the date of acquisition. We determine the fair value of the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. The excess purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill.

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. Our estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. After the conclusion of the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations. When we grant equity to employees of the selling stockholders in connection with an acquisition, we evaluate whether the awards are compensatory. This evaluation includes whether stock award vesting is contingent on the continued employment beyond the acquisition date. If continued employment is required for stock awards to vest, the award is treated as compensation for post-acquisition services and is recognized as compensation expense.

Transaction costs associated with business combinations are expensed as incurred and are included in Other operating expense in our Consolidated Statements of Operations.

On July 13, 2022, we completed the acquisition of First Heritage. The fair value of total consideration paid as part of the acquisition was comprised of $140.0 million in cash. Net assets acquired were $89.0 million, resulting in goodwill of $75.4 million.

On December 27, 2021, we acquired 100% of the outstanding stock of Heights Finance. The fair value of total consideration paid as part of the acquisition was comprised of $335.0 million in cash and $25.0 million of our common stock. Net assets acquired were $162.4 million, resulting in goodwill of $265.7 million. As of December 31, 2021, we completed the determination of the fair values of the acquired identifiable assets and liabilities. During the year ended December 31, 2022,we recorded measurement period adjustments that increased goodwill by $11.8 million$11.8 million. The measurement period adjustment related to the fair value of the loan ~~losses~~portfolio and would have resulted in $7.7 million of incremental interest and fee revenue during the three months ended March 31, ~~2017 because charge-off effectively occurs on day 91 under the revised methodology~~2022 and no ~~affected loans originated during the period reached day 91 until April 2017. Actual charge-offs and recoveries~~impact on defaulted/charged-off loans from the three months ended March 31, 2017 affected the allowance for loan losses in prospective periods. But, as discussed previously, the related net losses were recognized in the Consolidated Statement of Income during the year ended December 31, ~~2017~~2022. We recorded a measurement period adjustment in the

fourth quarter of 2022 that decreased goodwill by ~~applying expected net loss provision rates~~$3.5 million related to the ~~related loan originations.~~

~~Credit Services Organization~~

~~Through our CSO programs, we act~~final true-up of deferred tax balances after the pre-acquisition income tax returns were filed in October 2022. We made these measurement period adjustments to reflect the correct deferred tax balances which existed as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months. As a CSO we earn revenue by charging the customer a fee, or the CSO fee, for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customer’s obligation to repay the loan the customer receives from the third-party lender if the customer fails to do so. CSO fees are calculated based on the amount of the ~~customer’s outstanding loan. For CSO loans, each lender is responsible for providing~~acquisition date rather than events subsequent to such date. As of December 31, 2022, we completed the ~~criteria by which the customer’s application is underwritten and, if approved, determining the amount~~determination of the ~~customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans, if they go in to default.~~

~~These guarantees are performance guarantees as defined in ASC Topic 460. Performance guarantees are initially accounted for pursuant to ASC Topic 460 and recognized at~~ fair ~~value, and subsequently pursuant to ASC Topic~~

~~450 as contingent liabilities when we incur losses as the guarantor. The initial measurement~~values of the ~~guarantee liability is recorded at fair value~~acquired identifiable assets and ~~reported in~~liabilities.

On March 10, 2021, we acquired 100% of the ~~Credit services organization guarantee liability line in our Consolidated Balance Sheets.~~outstanding stock of Flexiti. The ~~initial~~ fair value of the guarantee is the price we would pay to a third party market participant to assume the guarantee liability. There is no active market for transferring the guarantee liability. Accordingly, we determine the initial fair valuetotal consideration paid as part of the ~~guarantee by estimating the expected losses on the guaranteed loans. The expected losses on the guaranteed loans are estimated by assessing the nature~~acquisition was comprised of ~~the~~$86.5 million in cash, $6.3 million in debt costs and $20.6 million in contingent cash consideration subject to future operating metrics, including revenue less NCOs and loan ~~products, the credit worthiness~~originations. Net assets acquired were $68.5 million, resulting in goodwill of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. We review the factors that support estimates of expected losses and the guarantee liability monthly. In addition, because the majority of the underlying loan customers make bi-weekly payments, loan-pool payment performance is evaluated more frequently than monthly.

Our guarantee liability represents the unamortized portion of the guarantee obligation required to be recognized at inception of the performance guarantee in accordance with ASC Topic 460 and a contingent liability for those performance guarantees where it is probable that we will be required to purchase the guaranteed loan from the lender in accordance with ASC Topic 450.

CSO fees are calculated based on the amount of the customer’s outstanding loan. We comply with the applicable jurisdiction’s Credit Services Organization Act or a similar statute. These laws generally define the services that we can provide to consumers and require us to provide a contract to the customer outlining our services and the cost of those services to the customer. For services we provide under our CSO programs, we receive payments from customers on their scheduled loan repayment due dates. The CSO fee is earned ratably over the term of the loan as the customers make payments. If a loan is paid off early, no additional CSO fees are due or collected. The maximum CSO loan term is 180 days and 18 months in Texas and Ohio, respectively.$44.9 million. During the year ended December 31, 2017 and 2016, approximately 53.6% and 53.2%, respectively, of Unsecured Installment Loans, and 53.6% and 62.5%, respectively, of Secured Installment Loans originated under CSO programs were paid off prior2021, we recorded a cumulative net measurement period adjustment that decreased goodwill by $4.5 million. The measurement period adjustment would have resulted in an insignificant increase in amortization expense related to the ~~original maturity~~merchant relationships intangible asset during the first quarter of 2021 when we acquired Flexiti. We made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date rather than from intervening events subsequent to such date. As of December 31, 2021, we completed the determination of the fair values of the acquired identifiable assets and liabilities. For the year ended December 31, 2022, we recorded a $7.6 million gain related to the decrease in fair value of contingent consideration.

~~Since CSO loans are made~~

Goodwill

We exercise judgment in evaluating assets for impairment. Goodwill is tested for impairment annually, or when circumstances arise which could more likely than not reduce the fair value of a reporting unit below its carrying value. These tests require comparing carrying values to estimated fair values of the reporting unit under review.

Our reporting units consist of the U.S. Direct Lending, Canada Direct Lending and Canada POS Lending segments, as defined by FASB’s ASC 280, Segment Reporting, for which we assess goodwill for impairment. Considering the uncertain macroeconomic environment, for the annual goodwill impairment analysis at October 1, 2022, management elected to forgo the qualitative assessment, and performed a ~~third-party lender,~~Step 1 analysis for all three reporting units. Management calculated the fair value of each reporting unit using a weighted combination of the income approach and the market approach. An impairment would occur if the carrying amount of a reporting unit exceeds the fair value of that reporting unit. We describe our approach to calculating fair value of the goodwill in Note 1, "Summary of Significant Policies and Nature of Operations." As a result of the goodwill impairment test at October 1, 2022, management determined the estimated fair value of the U.S. Direct Lending and Canada POS Lending reporting units did not exceed their respective carrying value. A two step analysis was performed to determine the amount of impairment for the U.S. Direct Lending reporting unit. The Canada Direct Lending reporting unit estimated fair values exceeded its carrying value. As such, we ~~do not~~recorded a pre-tax goodwill impairment charge of $107.8 million for the U.S. Direct Lending reporting unit and $37.4 million for the Canada POS Lending reporting unit. No impairment charge was required for the Canada Direct Lending reporting units. Events or circumstances that could indicate an impairment include ~~them~~a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or divestiture of a significant portion of a reporting unit or economic outlook. These and other macroeconomic factors were considered when performing the annual test as of October 1, 2022 and the quarterly triggering event analyses.

For the three months ended December 31, 2022, we reviewed U.S. Direct Lending, Canada Direct Lending and Canada POS Lending goodwill for triggering events that would indicate a need for an interim quantitative or qualitative assessment of goodwill impairment. As a result of the review, no additional assessment was deemed necessary, and thus there was no additional goodwill impairment recorded.

There continues to be uncertainty surrounding macroeconomic factors that could impact our reporting units. Changes in the expected length of the current economic downturn, timing of recovery or long-term revenue growth or profitability for these reporting units could increase the likelihood of a future goodwill impairment. Additionally, changes in market participant assumptions such as an increased discount rate or further share price reductions could increase the likelihood of a future impairment.

The following table summarizes the segment allocation of recorded goodwill on our Consolidated Balance Sheets as loans receivable. CSO fees receivable are included in “Prepaid expense and other” in our Consolidated Balance Sheets. We receive payments from customers for these fees on their scheduled loan repayment due dates.of December 31, 2022:

~~Recently Issued Accounting Pronouncements~~


(in thousands)	December 31, 2022		Percent of Total		December 31, 2021		Percent of Total
U.S. Direct Lending (1)	$	248,011	89.8	%	$	359,779	83.7	%
Canada Direct Lending	28,258		10.2	%	30,105		7.0	%
Canada POS Lending	—		—	%	39,908		9.3	%
Total Goodwill	$	276,269			$	429,792
(1) Changes in Goodwill between December 31, 2021 and September 30, 2022 are primarily due to the acquisition of First Heritage, offset by the sale of the Legacy U.S. Direct Lending Business, refer to FN 14 "Acquisitions and Divestitures".

~~See~~ ~~Note 1 Summary of Significant Accounting Policies and Nature of Operations~~ ~~of our Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements.~~

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Concentration Risk~~

Revenues originated in Texas, Ontario, and California represented approximately 25.6%, 12.9% and 17.7%, respectively, of our consolidated total revenues for the year ended December 31, 2017. Revenues originated in Texas, Ontario, and California represented approximately 26.1%, 14.4%, and 15.1%, respectively, of our consolidated total revenues for the year ended December 31, 2016. Revenues originated in Texas, Ontario, and California represented approximately 26.1%, 15.1% and 13.7%, respectively, of our consolidated total revenues for the year ended December 31, 2015.

~~quality of the financial institutions holding such deposits. Historically, we have not experienced any losses due to such cash concentration.~~

Financial instruments that potentially subject us to concentrations of credit risk primarily consist of our consumer loans receivable. Concentrations of credit risk with respect to consumer loans receivable are limited due to the large number of customers comprising our customer base.

~~Regulatory Risk~~

We are subject to regulation by federal, state and provincial governmental authorities that affect the products and services that we provide, particularly payday advance loans. The level and type of regulation for payday advance loans varies greatly by jurisdiction, ranging from jurisdictions with moderate regulations or legislation, to other jurisdictions having very strict guidelines and requirements.

To the extent that laws and regulations are passed that affect the manner in which we conduct business in any one of those markets, our financial position, results of operations and cash flows could be adversely affected. Additionally, our ability to meet the financial covenants included in our credit agreement could be negatively impacted.

Interest Rate Risk

We are exposed to interest rate risk on our ~~Senior Revolver, Cash Money Revolving Credit Facility~~unhedged revolving credit facilities and ~~our Non-Recourse U.S. SPV Facility. As of December 31, 2016, we were also exposed to interest rate risk on our ABL Facility, which matured~~non-recourse funding facilities, as further described in ~~May 2017 and was repaid through a sale of the underlying collateral to the Non-Recourse U.S. SPV Facility.~~Note 6 , "Debt." Our variable interest expense is sensitive to changes in the general level of interest rates. We may ~~from time to time~~ enter into interest rate caps, interest rate swaps, collars or similar instruments with the objective of reducing our ~~volatility in~~ borrowing ~~costs.~~cost volatility. We do not use derivative financial instruments for speculative or trading purposes. ~~We had~~

Interest expense on such borrowings is sensitive to changes in the market rate of interest. Hypothetically, a 1% increase in the average market rate would result in an increase in our annual interest expense of $9.1 million. This amount is determined by considering the impact of the hypothetical interest rates on our borrowing cost, but does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Due to the uncertainty of the specific changes and their possible effects, the foregoing sensitivity analysis assumes no ~~derivative~~changes in our financial ~~instruments related to interest rate risk outstanding at December 31, 2017, 2016 or 2015.~~structure.

All of our customer loan portfolios have fixed interest rates and fees that do not fluctuate over the life of the loan. Notwithstanding that, we support fixed rate lending in part with variable rate borrowing. We do not believe there is any material interest rate sensitivity associated with our customer loan portfolio, primarily due to their short duration.

~~The weighted average interest rate on the $120.4 million of variable debt outstanding on the Non-Recourse U.S. SPV Facility as~~As of December 31, ~~2017 was approximately 12.0%~~2022, we transitioned all debt facilities from LIBOR to SOFR, as required by ASU 2020-04, Reference Rate Reform (Topic 848). ~~The weighted average interest rate~~ See Note 1, "Summary of Significant Accounting Policies and Nature of Operations" for additional information on ~~the $91.7 million of variable debt outstanding on the Non-Recourse U.S. SPV Facility and the ABL Facility, which matured in May 2017, as of December 31, 2016 was approximately 11.5%.~~ASU 2020-04.

Foreign Currency Exchange Rate Risk

~~As foreign~~Foreign currency exchange ~~rates change,~~rate fluctuations impact the translation of the financial results of the ~~United Kingdom and~~ Canadian operations ~~into~~from Canadian Dollars to U.S. ~~Dollars will be impacted.~~Dollars. Our operations in Canada ~~and the United Kingdom~~ represent a significant portion of our total operations, and as a result, a material ~~change~~changes in ~~foreign~~the currency exchange ~~rates in either country~~rate between these countries could have a significant impact on our consolidated ~~financial position,~~ results of operations, financial condition or cash flows. ~~From time to time, we~~At December 31, 2022, revenue would decrease by $56.1 million and net loss from continuing operations before income taxes would decrease by approximately $39.4 million, if average foreign exchange rates had declined by 10% against the U.S. dollar in 2022. These amounts were determined by considering the adverse impact of a hypothetical foreign exchange rate on the revenue and net loss before income taxes of the Company based on Canadian operations.

We may elect to purchase ~~financial instruments~~derivatives as hedges against foreign exchange rate risks with the objective of ~~protecting~~mitigating the impact of foreign currency fluctuations on our results of ~~operations in the United Kingdom and/or Canada against foreign currency fluctuations.~~operations. We typically hedge existing short-term balance sheet exposures, as well as anticipated cash flows between our foreign subsidiaries and domestic subsidiaries. ~~As of December 31, 2016 we had entered into a cash flow hedge in which the hedging instrument is a forward extra(which is a common zero cost strategy that allows the client to be fully~~We do not purchase derivatives for speculative purposes.

~~protected at a predetermined budget rate while allowing for some profit participation if the spot rate moves in favor of the client) to sell GBP 4,800,000. This contract completed in April 2017.~~

We performed an assessment that determined that all critical terms of the hedging instrument and the hedged transaction match and as such have qualitatively concluded that changes in the option’s intrinsic value will completely offset the change in the expected cash flows based on changes in the spot rate. In making that determination, the guidance in ASC815-20-25-84 was used. Future assessment will be performed utilizing the guidance in ASC815-20-35-9 through 35-13, Relative Ease of Assessing Effectiveness. Additionally, in accordance with ASC815-20-25-82, since the effectiveness of this hedge is assessed based on changes in the option’s intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness.

We record derivative instruments at fair value on the balance sheet as either an asset or ~~liability on the balance sheet.~~liability. Changes in the options intrinsic value, to the extent that they are effective as a hedge, are recorded in ~~other~~Other comprehensive income (loss). For derivatives that qualify and have been designated as cash flow or fair value hedges for accounting purposes, changes in fair value have no net impact on earnings to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value or cash flows attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). The contract completed in April 2017 and in the second quarter of 2017 we recorded a transaction loss of $0.3 million associated with this hedge. At December 31, 2017 we did not hold any financial instruments as hedges against foreign exchange rate risks.hedged.

~~Potential Future Impact of CFPB Rule~~

~~Prospects for Effectiveness of the CFPB Rule~~

Pursuant to its authority to adopt UDAAP rules, the CFPB published in the Federal Register on November 17, 2017 a new rule applicable to payday, title and certain high-cost installment loans. The provisions of this CFPB Rule directly applicable to us are scheduled to become effective in August 2019. However, the CFPB Rule remains subject to potential override by Congress pursuant to the Congressional Review Act. Moreover, CFPB leadership changed in November 2017 and the agency is currently headed by an Acting Director. The Acting Director or successor could suspend, delay or modify the CFPB Rule. Further, we expect that important elements of the CFPB Rule will be subject to legal challenge by trade groups or other private parties. Legislation was introduced in the House of Representatives December 1, 2017 to consider a review of the CFPB Rule. We cannot predict at this time whether Congress will allow the rule to stand or whether private legal challenges will be successful. Thus, it is impossible to predict whether and when the CFPB Rule will go into effect and, if so, whether and how it might be modified or the impact on our business and operations.

See “Regulatory Environment and Compliance—U.S. Regulations—U.S. Federal Regulations—CFPB Rule” for a summary of the CFPB Rule. The CFPB Rule could potentially have a material adverse impact on our results of operations. See “Risk Factors—Risks Relating to the Regulation of Our Industry—The CFPB promulgated new rules applicable to our loans that could have a material adverse effect on our business and results of operations.”

~~Anticipated Impact of CFPB Rule on U.S. Single-Payment Short-Term Loans~~

One major aspect of the CFPB Rule is its ATR provisions, together with the related provisions applicable to alternative Section 1041.6 Loans. These provisions apply to our U.S. single-payment loans and lines of credit. We cannot be certain about the effects these provisions will have on our business but we do believe they may include the following effects.

U.S. single-payment loans represented approximately 11% of total revenues for the year ending December 31, 2017. In part in response to the CFPB Rule, we will continue to focus on longer-term installment and line of credit

products in states with laws that accommodate such products. However, certain states, such as California, which currently accounts for the majority of our single-pay revenue, do not permit a small-dollar installment loan alternative, and we believe complying with the CFPB Rule could substantially reduce single-payment loan revenue in these states, perhaps by more than 50% from current levels.

As to our lines of credit, we expect to make modifications that will render the CFPB Rule inapplicable to these loans. Accordingly, we do not currently believe that these modifications will have a material adverse impact on us.

~~Anticipated Impact of CFPB Rule on Payments~~

The penalty fee prevention provision of the CFPB Rule mandates that if we initiate two consecutive unsuccessful payment attempts from the same bank account, whether by Automated Clearing House, or ACH, post-dated check, or payment card, we must obtain from our borrowers a new payment authorization before initiating a new payment attempt. Additionally, the penalty fee prevention provisions will require the lender generally to give the consumer at least three business days’ advance notice before attempting to collect payment by accessing a consumer’s checking, savings, or prepaid account.

While we are currently subject to NACHA restrictions on ACH payments and separate card network restrictions on presentments made on debit cards, these restrictions do not have the force of law and are significantly more liberal than the limit of two unsuccessful attempts articulated in the CFPB Rule. While the overwhelming majority of our electronic payments are collected in the first two attempts, depending on the type of loan and the timing of the payments, we currently make three or more attempts without obtaining a new payment authorization from the customer. We believe that enhanced customer relationship management, or CRM, tools to help obtain new payment authorizations, together with a more targeted, predictive approach to presenting electronic payments against customers’ bank accounts, will mitigate the impact of the penalty fee restrictions. As with the other requirements, we have until late 2019 to manage the transition. However, to the extent that we are unable to develop new and effective CRM tools and/or are unsuccessful in improving the timing of the permitted electronic payments, the implementation of the CFPB Rule on payments could have a material adverse effect on our results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Index to Consolidated Financial Statements						Page
Report of Independent Registered Public Accounting Firm						53
Consolidated Balance Sheets - December 31, 2022 and 2021						56
Consolidated Statements of Operations - Years Ended December 31, 2022, 2021 and 2020						57
Consolidated Statements of Comprehensive (Loss) Income - Years Ended December 31, 2022, 2021 and 2020						58
Consolidated Statements of Changes in Equity - Years Ended December 31, 2022, 2021 and 2020						59
Consolidated Statements of Cash Flows - Years Ended December 31, 2022, 2021 and 2020						60
Notes to Consolidated Financial Statements						62

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors ~~and Shareholders~~

of CURO Group Holdings ~~Corporation~~Corp.

Opinion on the ~~financial statements~~Financial Statements

We have audited the accompanying consolidated balance sheets of CURO Group Holdings ~~Corporation~~Corp. and subsidiaries ~~(a Delaware corporation)~~ (the ~~“Company”~~"Company") as of December 31, ~~2017~~2022 and ~~2016,~~2021, the related consolidated statements of ~~income,~~operations, comprehensive income (loss), changes in ~~stockholders’~~ equity and cash flows, for each of the three years in the period ended December 31, ~~2017,~~2022, and the related notes (collectively referred to as the ~~“financial statements”~~"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2022 and ~~2016,~~2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017,~~2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 9, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for ~~opinion~~Opinion

These financial statements are the responsibility of the ~~Company’s~~Company's management. Our responsibility is to express an opinion on the ~~Company’s~~Company's financial statements based on our audits. We are a public accounting firm registered with the ~~Public Company Accounting Oversight Board (United States) (“PCAOB”)~~PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Loan Losses — Refer to Notes 1 and 2 to the financial statements

Critical Audit Matter Description

The Company originates various loan products in the United States (“U.S.”) and Canada, including Unsecured Installment, Secured Installment, Revolving Line of Credit and Single-Pay loans. The Company estimates and records an allowance for loans and interest receivable based on historical loss rates and other factors for loans containing similar risk characteristics. In addition, management evaluates whether qualitative adjustments to historical loss rates should be made based on relevant factors. The allowance for loan losses at December 31, 2022 was $122 million.

There is a significant amount of judgment required by management in evaluating qualitative factors. Auditing the allowance for loan losses, inclusive of assessing the adequacy of qualitative adjustments requires a high degree of auditor judgment and an increased extent of effort, including involving our credit specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the allowance for loan losses included the following, among others:

•We tested the design and operating effectiveness of management’s controls over the allowance for loan losses including controls over identification of qualitative adjustments for the U.S. Direct Lending, Canada Direct Lending and Canada POS Lending portfolios.

•With the assistance of our credit specialists, we evaluated the reasonableness of the quantitative model and methodology used to determine the allowance.

•We reviewed management’s modeling methodology including assumptions for reasonableness.

•We reviewed independent economic statistics such as common macroeconomic indicators, as well as industry peers, and we used data analytics to identify any changes in the loan portfolio to assess the completeness of management’s qualitative adjustments on the allowance for loan losses.

•We tested the completeness and accuracy of underlying loan data used in management’s models and we recalculated management’s model to validate its mathematical accuracy.

•We assessed the reasonableness of the model by comparing modeled losses to actual historical losses incurred.

Business Combinations — Refer to Notes 1 and 14 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of First Heritage Credit (“First Heritage” or “FHC”) on July 13, 2022. Total consideration paid for the acquisition was approximately $140 million. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values as of the date of acquisition, including loans receivable of $218 million.

The fair value determination of loans receivable requires management to make significant estimates and assumptions regarding projected cash flows and discount rates. Performing audit procedures to evaluate the reasonableness of those estimates and assumptions required a high degree of auditor judgment, and an increased extent of effort, including involving fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the fair value of loans receivable from First Heritage included the following, among others:

•We tested the design and operating effectiveness of controls over the valuation methodology used, including management’s controls over significant assumptions and discounts rates.

•We assessed the knowledge, skill, ability and objectivity of management’s valuation specialist and evaluated the work performed.

•We assessed the reasonableness of management’s forecasts and performed sensitivity analyses to evaluate the impact of changes in significant assumptions to the valuation of loans receivable.

•With the assistance of fair value specialists, we evaluated:

◦The reasonableness of the valuation methodology, and

◦The reasonableness of the discount rates used to present value the expected cash flows by:

▪Testing the source information underlying the determination of the discount rate and testing mathematical accuracy of the calculation.

▪Developing a range of independent estimates and comparing those to the discount rate selected by management to evaluate the inputs used in the calculation.

•We evaluated whether the estimated cash flows were consistent with evidence obtained in other areas of the audit.

Goodwill — Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

The Company completed their annual impairment analysis as of October 1, 2022. The Company assesses goodwill on a reporting unit level (U.S. Direct Lending, Canada POS Lending and Canada Direct Lending). Based on this analysis, $37 million and $108 million of impairment was recorded at the Canada POS Lending and U.S. Direct Lending, respectively.

The Company determines the fair value of each reporting unit using a weighted combination of the income approach and the market approach. The determining the fair value of the reporting unit requires management to make significant estimates and assumptions related to forecasts of revenues, margins and discount rates.

The fair value determination of the Canada POS Lending and U.S. Direct Lending reporting units requires management to make significant estimates and assumptions. Performing audit procedures to evaluate the reasonableness of those estimates and assumptions required a high degree of auditor judgment, and an increased extent of effort, including involving fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to goodwill impairment of the Canada POS Lending and U.S. Direct Lending reporting units included the following, among others:

•We tested design and operating effectiveness of management’s controls over goodwill impairment.

•We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

•We evaluated the reasonableness of management’s forecasts by comparing the forecasts to historical results, internal communications to management and the Board of Directors, and forecasted information included in Company press releases as well as in analyst and industry reports of the Company and companies in its peer group.

•With the assistance of fair value specialists, we evaluated management’s key judgments and estimates applied in their determination of fair value by assessing the appropriateness of the valuation methodology, the selected discount rate and valuation multiples and comparing those to management’s assumptions and testing the mathematical accuracy of management’s calculation.

/s/ ~~GRANT THORNTON~~Deloitte & Touche LLP

Chicago, Illinois

March 9, 2023

We have served as the ~~Company’s~~Company's auditor since ~~2010.~~2019.

~~Kansas City, Missouri~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of CURO Group Holdings Corp.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of CURO Group Holdings Corp. and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated March 9, 2023, expressed an unqualified opinion on those financial statements.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at First Heritage Credit LLC, which was acquired on July 13, 2022, whose financial statements constitute 9.0% of total assets, and 5.3% of revenues of the consolidated financial statement amount as of and for the year ended December 31, 2022. Accordingly, our audit did not include the internal control over financial reporting at First Heritage Credit LLC.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Chicago, Illinois

March ~~13, 2018~~9, 2023

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

December 31, 2017
December 31, 2016
ASSETS
Cash $ 162,374

$ 193,525
Restricted cash (includes restricted cash of consolidated VIEs of $6,871 and $2,770 as of December 31, 2017 and 2016, respectively) 12,117

7,828
Gross loans receivable (includes loans of consolidated VIEs of $213,846 and $130,199 as of December 31, 2017 and 2016, respectively) 432,837

286,196
Less: allowance for loan losses (includes allowance for losses of consolidated VIEs of $46,140 and $22,134 as of December 31, 2017 and 2016, respectively) (69,568 )
(39,192 )
Loans receivable, net 363,269

247,004
Deferred income taxes 772

12,635
Income taxes receivable 3,455

9,378
Prepaid expenses and other 42,512

39,248
Property and equipment, net 87,086

95,896
Goodwill 145,607

141,554
Other intangibles, net of accumulated amortization of $41,156 and $36,985 32,769

30,901
Other 9,770

2,829
Total Assets $ 859,731

$ 780,798
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 55,792

$ 42,663
Deferred revenue 11,984

12,342
Income taxes payable 4,120

1,372
Current maturities of long-term debt —

147,771
Accrued interest (includes accrued interest of consolidated VIEs of $1,266 and $775 as of December 31, 2017 and 2016, respectively) 25,467

8,183
Credit services organization guarantee liability 17,795

17,052
Deferred rent 11,577

11,868
Long-term debt (includes long-term debt and issuance costs of consolidated VIEs of $124,590 and $4,188 and $68,311 and $5,257 as of December 31, 2017 and 2016, respectively) 706,225

477,136
Subordinated shareholder debt 2,381

2,227
Other long-term liabilities 5,768

5,016
Deferred tax liabilities 11,486

14,313
Total Liabilities 852,595

739,943
Commitments and contingencies

Stockholders' Equity

Preferred stock - $0.001 par value; 25,000,000 and no shares authorized, respectively, and no shares were issued at either period end —

—
Common stock - $0.001 par value; 225,000,000 and 72,000,000 shares authorized, and 44,561,419 and 37,894,752 issued and outstanding at the respective period ends 8

1
Dividends in excess of paid-in capital 46,079

(35,996 )
Retained earnings 3,988

136,835
Accumulated other comprehensive loss (42,939 )
(59,985 )
Total Stockholders' Equity 7,136

40,855
Total Liabilities and Stockholders' Equity $ 859,731

$ 780,798


	December 31, 2022		December 31, 2021

ASSETS
Cash and cash equivalents	$	73,932	$	63,179
Restricted cash (includes restricted cash of consolidated VIEs of $52,277 and $57,155 as of December 31, 2022 and December 31, 2021, respectively)	91,745		98,896
Gross loans receivable (includes loans of consolidated VIEs of $1,964,275 and $1,294,706 as of December 31, 2022 and December 31, 2021, respectively)	2,087,833		1,548,318
Less: Allowance for loan losses (includes allowance for loan losses of consolidated VIEs of $108,451 and $66,618 as of December 31, 2022 and December 31, 2021, respectively)	(122,028)		(87,560)
Loans receivable, net	1,965,805		1,460,758
Income taxes receivable	21,918		31,774
Prepaid expenses and other (includes prepaid expenses and other of consolidated VIEs of $12,908 and $— as of December 31, 2022 and December 31, 2021, respectively)	53,057		42,038
Property and equipment, net	31,957		54,635
Investment in Katapult	23,915		27,900
Right of use asset - operating leases	61,197		116,300
Deferred tax assets	49,893		15,639
Goodwill	276,269		429,792
Intangibles, net	123,677		109,930
Other assets	15,828		9,755
Total Assets	$	2,789,193	$	2,460,596
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities (includes accounts payable and accrued liabilities of consolidated VIEs of $13,571 and $9,886 as of December 31, 2022 and December 31, 2021, respectively)	$	73,827	$	121,434
Deferred revenue	32,259		21,649
Lease liability - operating leases	62,847		122,431
Contingent consideration related to acquisition	16,884		26,508
Income taxes payable	—		680
Accrued interest (includes accrued interest of consolidated VIEs of $7,023 and $3,279 as of December 31, 2022 and December 31, 2021, respectively)	38,460		34,974
Liability for losses on CSO lender-owned consumer loans	—		6,908
Debt (includes debt and issuance costs of consolidated VIEs of $1,609,427 and $20,047 as of December 31, 2022 and $979,500 and $14,428 as of December 31, 2021, respectively)	2,607,314		1,945,793
Other long-term liabilities	11,736		13,845
Deferred tax liabilities	—		6,044
Total Liabilities	2,843,327		2,300,266
Commitments and contingencies (Note 7)
Stockholders' Equity
Preferred stock - $0.001 par value, 25,000,000 shares authorized; no shares were issued	—		—
Common stock - $0.001 par value; 225,000,000 shares authorized; 50,216,165 and 49,684,080 shares issued; and 40,518,052 and 40,810,444 shares outstanding at the respective period ends	23		23
Treasury stock, at cost - 9,698,113 and 8,873,636 shares at the respective period ends	(136,832)		(124,302)
Paid-in capital	124,483		113,520
Retained earnings	4,268		203,467
Accumulated other comprehensive loss	(46,076)		(32,378)
Total Stockholders' (Deficit) Equity	(54,134)		160,330
Total Liabilities and Stockholders' (Deficit) Equity	$	2,789,193	$	2,460,596

See ~~the~~ accompanying Notes to Consolidated Financial ~~Statements~~Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(in thousands, except per share data)

Year Ended December 31,
2017 2016 2015
Revenue $ 963,633
$ 828,596
$ 813,131
Provision for losses 326,226
258,289
281,210
Net revenue 637,407
570,307
531,921

Cost of providing services
Salaries and benefits 105,196
104,541
107,059
Occupancy 54,612
54,509
53,288
Office 21,402
20,463
19,929
Other costs of providing services 54,902
53,617
47,380
Advertising 52,058
43,921
65,664
Total cost of providing services 288,170
277,051
293,320
Gross margin 349,237
293,256
238,601

Operating (income) expense
Corporate, district and other 154,973
124,274
130,534
Interest expense 82,684
64,334
65,020
Loss (Gain) on extinguishment of debt 12,458
(6,991 ) —
Restructuring costs 7,393
3,618
4,291
Goodwill and intangible asset impairment charges —
—
2,882
Total operating expense 257,508
185,235
202,727
Net income before income taxes 91,729
108,021
35,874
Provision for income taxes 42,576
42,577
18,105
Net income $ 49,153
$ 65,444
$ 17,769

Weighted average common shares outstanding:
Basic 38,351
37,908
37,908
Diluted 39,277
38,803
38,895
Net income per common share:
Basic earnings per share $ 1.28
$ 1.73
$ 0.47
Diluted earnings per share $ 1.25
$ 1.69
$ 0.46


	For the Year Ended December 31,
		2022		2021		2020
Revenue
Interest and fees revenue		$	905,407	$	743,735	$	788,188
Insurance premiums and commissions		88,490		49,411		35,553
Other revenue		32,021		24,697		23,655
Total revenue		1,025,918		817,843		847,396
Provision for losses		400,325		245,668		288,811
Net revenue		625,593		572,175		558,585
Operating Expenses
Salaries and benefits		281,636		237,109		196,817
Occupancy		59,485		55,559		57,271
Advertising		32,143		38,762		44,552
Direct operations		64,128		60,056		46,893
Depreciation and amortization		36,322		26,955		17,498
Other operating expense		82,811		68,473		47,048
Total operating expenses		556,525		486,914		410,079
Other expense (income)
Interest expense		185,661		97,334		72,709
Loss (income) from equity method investment		3,985		(3,658)		(4,546)
Gain from equity method investment		—		(135,387)		—
Goodwill impairment		145,241		—		—
Loss on extinguishment of debt		4,391		40,206		—
(Gain) loss on change in fair value of contingent consideration		(7,605)		6,209		—
Gain on sale of business		(68,443)		—		—
Total other expense (income)		263,230		4,704		68,163
(Loss) income from continuing operations before income taxes		(194,162)		80,557		80,343
(Benefit) provision for income taxes		(8,678)		21,223		5,895
Net (loss) income from continuing operations		$	(185,484)	$	59,334	$	74,448
Income from discontinued operations, before income taxes		—		—		1,714
Income tax expense related to disposition		—		—		429
Net income from discontinued operations		—		—		1,285
Net (loss) income		(185,484)		59,334		75,733

Basic (loss) earnings per share:
Continuing operations		$	(4.59)	$	1.44	$	1.82
Discontinued operations		—		—		0.03
Basic (loss) earnings per share		$	(4.59)	$	1.44	$	1.85

Diluted (loss) earnings per share:
Continuing operations		$	(4.59)	$	1.38	$	1.77
Discontinued operations		—		—		0.03
Diluted (loss) earnings per share		$	(4.59)	$	1.38	$	1.80

Weighted average common shares outstanding:
Basic		40,428		41,155		40,886
Diluted		40,428		43,143		42,091

See ~~the~~ accompanying Notes to Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

Year Ended December 31,
2017 2016 2015
Net income $ 49,153
$ 65,444
$ 17,769
Other comprehensive income (loss):

Cash flow hedges, net of $0 tax in all periods 333
(333 ) —
Foreign currency translation adjustment, net of $0 tax in all periods 16,713
(6,022 ) (30,512 )
Other comprehensive income (loss) 17,046
(6,355 ) (30,512 )
Comprehensive income (loss) $ 66,199
$ 59,089
$ (12,743 )


	For the Year Ended December 31,
		2022		2021		2020
Net (loss) income		$	(185,484)	$	59,334	$	75,733
Other comprehensive (loss) income, net of tax:
Change in derivative instruments designated as cash flow hedges, net of tax		5,333		—		—
Foreign currency translation adjustment, net of tax		(19,031)		(2,246)		8,531
Other comprehensive (loss) income, net of tax		(13,698)		(2,246)		8,531
Comprehensive (loss) income		$	(199,182)	$	57,088	$	84,264

See ~~the~~ accompanying Notes to Consolidated Financial ~~Statements~~Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except share data)


	Common Stock			Treasury Stock, at cost		Paid-in capital		Retained Earnings (Deficit)		AOCI (1)		Total Stockholders' Equity






















Balances at December 31, 2019	41,156,224	$	9	$	(72,343)	$	68,087	$	93,423	$	(38,663)	$	50,513
Net income	—	—		—		—		75,733		—		75,733
Foreign currency translation adjustment and other	—	—		—		—		—		8,531		8,531
Dividends	—	—		—		—		(9,088)		—		(9,088)
Share-based compensation	—	—		—		12,910		—		—		12,910
Proceeds from exercise of stock options	274,510	—		—		765		—		—		765
Repurchase of common stock	(540,762)	—		(5,509)		—		—		—		(5,509)
Net settlement of share-based awards	480,532	—		—		(1,950)		—		—		(1,950)
Balances at December 31, 2020	41,370,504	$	9	$	(77,852)	$	79,812	$	160,068	$	(30,132)	$	131,905
Net income	—	—		—		—		59,334		—		59,334
Foreign currency translation adjustment and other	—	—		—		—		—		(2,246)		(2,246)
Dividends	—	—		—		—		(15,935)		—		(15,935)
Common stock issued for acquisition of Heights Finance	1,446,257	14		—		24,355		—		—		24,369
Share-based compensation	—	—		—		13,976		—		—		13,976
Proceeds from exercise of stock options	66,972	—		—		272		—		—		272
Repurchase of common stock (2)	(2,718,333)	—		(46,450)		—		—		—		(46,450)
Net settlement of share-based awards	645,044	—		—		(4,895)		—		—		(4,895)
Balances at December 31, 2021	40,810,444	$	23	$	(124,302)	$	113,520	$	203,467	$	(32,378)	$	160,330
Net loss	—	—		—		—		(185,484)				(185,484)
Other comprehensive loss, net of tax	—	—		—		—		—		(13,698)		(13,698)
Dividends	—	—		—		—		(13,715)		—		(13,715)
Share based compensation expense	—	—		—		13,957		—		—		13,957
Repurchase of common stock	(824,477)	—		(12,530)		—		—		—		(12,530)
Common stock issued for RSUs vesting, net of shares withheld and withholding paid for employee taxes	532,085	—				(2,994)		—		—		(2,994)
Balances at December 31, 2022	40,518,052	$	23	$	(136,832)	$	124,483	$	4,268	$	(46,076)	$	(54,134)
(1) Accumulated other comprehensive income (loss)
(2)Includes the repurchase of 500,000 shares of common stock from a related party for $18.10 per share. See Note 23, "Share Repurchase Program" for additional information.

Common Stock Dividends in excess of paid-in capital Retained Earnings
AOCI ⁽¹⁾
Total Stockholders' Equity
Shares Outstanding Par Value
Balances at December 31, 2014 37,894,752
$ 1
$ (38,044 ) $ 53,622
$ (23,118 ) $ (7,539 )
   Net income

17,769

17,769
   Foreign currency translation adjustment

(30,512 ) (30,512 )
   Repurchase of equity award

(371 )

(371 )
   Share based compensation expense

1,271

1,271
Balances at December 31, 2015 37,894,752
1
(37,144 ) 71,391
(53,630 ) (19,382 )
   Net income 65,444
65,444
   Foreign currency translation adjustment (6,022 ) (6,022 )
   Cash flow hedge (333 ) (333 )
   Share based compensation expense 1,148
1,148
Balances at December 31, 2016 37,894,752
1
(35,996 ) 136,835
(59,985 ) 40,855
   Net income 49,153
49,153
   Foreign currency translation adjustment 16,713
16,713
   Cash flow hedge expiration 333
333
   Initial Public Offering 6,666,667
7
81,110
81,117
   Dividends —
(182,000 ) (182,000 )
   Share based compensation expense 965
965
Balances at December 31, 2017 44,561,419
$ 8
$ 46,079
$ 3,988
$ (42,939 ) $ 7,136

⁽¹⁾Accumulated other comprehensive income (loss)

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

Year Ended December 31,
2017 2016 2015
Cash flows from operating activities
Net income $ 49,153
$ 65,444
$ 17,769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 18,837
18,905
19,112
Provision for loan losses 326,226
258,289
281,210
Goodwill and intangible asset impairment charges —
—
2,882
Restructuring costs 3,161
523
2,249
Amortization of debt issuance costs 3,329
3,289
3,221
Amortization of bond discount/(premium) 1,225
(1,541 ) (1,404 )
Deferred income taxes 9,036
(680 ) (2,190 )
Loss on disposal of property and equipment 2,278
217
628
Loss (gain) on extinguishment of debt 12,458
(6,991 ) —
Increase in cash surrender value of life insurance (1,308 ) (918 ) —
Share-based compensation expense 965
1,148
1,271
Realized loss on cash flow hedge 333
—
—
Changes in operating assets and liabilities:
Loans receivable (435,458 ) (287,827 ) (301,581 )
Prepaid expenses and other assets (3,264 ) (5,733 ) (3,152 )
Accounts payable and accrued liabilities 8,896
2,010
(2,168 )
Deferred revenue (752 ) (2,080 ) 4,644
Income taxes payable 1,213
6,852
(4,278 )
Income taxes receivable 3,486
(7,154 ) (1,713 )
Other assets and liabilities 17,596
3,959
614
Net cash provided by operating activities 17,410
47,712
17,114
Cash flows from investing activities
Purchase of property, equipment and software (9,757 ) (16,026 ) (19,832 )
Cash paid for Cognical Holdings preferred shares (5,600 ) —
—
Changes in restricted cash (3,975 ) 3,104
(6,423 )
Net cash (used in) investing activities (19,332 ) (12,922 ) (26,255 )
Cash flows from financing activities
Net proceeds from issuance of common stock 81,117
—
—
Proceeds from Non-Recourse U.S. SPV facility and ABL facility 60,130
91,717
—
Payments on Non-Recourse U.S. SPV facility and ABL facility (27,257 ) —
—
Proceeds from issuance of 12.00% Senior Secured Notes 601,054
—
—
Payments on 10.75% Senior Secured Notes (426,034 ) (18,939 ) —
Payments on 12.00% Senior Cash Pay Notes (125,000 ) —
—
Debt issuance costs paid (18,701 ) (5,346 ) —
Proceeds from credit facilities 43,084
30,000
57,050
Payments on credit facilities (43,084 ) (38,050 ) (69,000 )
Payment for cash settlement of equity award —
—
(371 )
Dividends paid to stockholders (182,000 ) —
—
Net cash (used in) provided by financing activities (36,691 ) 59,382
(12,321 )
Effect of exchange rate changes on cash 7,462
(1,208 ) (8,064 )
Net (decrease) increase in cash (31,151 ) 92,964
(29,526 )
Cash at beginning of period 193,525
100,561
130,087
Cash at end of period $ 162,374
$ 193,525

$ 100,561

See the accompanying Notes to Consolidated Financial Statements

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(dollars in thousands)


	For the Year Ended December 31,
	2022		2021		2020
Cash flows from operating activities
Net (loss) income	$	(185,484)	$	59,334	$	74,448
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	36,322		26,955		17,498
Provision for losses	400,325		245,668		288,811
Amortization of debt issuance costs and bond discount	11,315		6,871		3,935
Loss on extinguishment of debt	4,391		40,206		—
Deferred income tax benefit	(38,254)		(18,297)		11,691
Gain on disposal of Legacy U.S. Direct Lending business	(68,443)		—		—
Loss on disposal of property and equipment	4,420		7,054		150
Loss from equity method investment	3,985		(3,658)		(4,546)
Impairment loss (gain) from equity method investment	—		(135,387)		—
Change in fair value of contingent consideration	(7,605)		6,209		—
Share-based compensation	13,957		13,976		12,910
Goodwill impairment	145,241		—		—
Changes in operating assets and liabilities:
Accrued interest on loans receivable	(37,257)		8,751		23,714
Prepaid expenses and other assets	15,003		(6,053)		8,058
Accounts payable and accrued liabilities	(46,624)		43,832		(11,876)
Deferred revenue	17,765		16,581		(4,769)
Income taxes payable	(9,088)		678		—
Income taxes receivable	17,892		3,829		(20,603)
Accrued interest	3,624		13,069		264
Other long-term liabilities	3,122		(6,445)		3,820
Net cash provided by continuing operating activities	284,607		323,173		403,505
Net cash provided by (used in) discontinued operating activities	—		—		1,714
Net cash provided by operating activities	284,607		323,173		405,219
Cash flows from investing activities
Purchase of property, equipment and software	(45,821)		(23,648)		(10,920)
Loans receivable originated or acquired	(2,554,947)		(1,517,275)		(1,296,398)
Loans receivable repaid	1,664,851		928,302		1,079,437
Proceeds from Katapult			136,879		(12,757)
Acquisition of Ad Astra, net of acquiree's cash received	—		—		(14,418)
Acquisition of Flexiti, net of acquiree's cash received			(91,203)		—
Acquisition of Heights Finance, net of acquiree's cash received	—		(356,543)		—
Divestiture of Legacy U.S. Direct Lending Business, net of cash provided	288,980		—		—
Acquisition of First Heritage, net of acquiree's cash received	(131,012)		—		—
Net cash used in investing activities	(777,949)		(923,488)		(255,056)
Cash flows from financing activities
Proceeds from SPV and SPE facilities	1,724,600		549,511		73,037
Payments on SPV and SPE facilities	(1,175,047)		(244,577)		(42,535)
Debt issuance costs paid	(19,252)		(26,387)		(6,992)
Proceeds from credit facilities	169,496		68,108		69,947
Payments on credit facilities	(169,496)		(68,108)		(69,947)
Extinguishment of 8.25% Senior Secured Notes	—		(690,000)		—
Proceeds from issuance of 7.50% Senior Secured Notes	—		1,000,000		—
Payments of call premiums from early debt extinguishments	—		(31,250)		—
Proceeds from exercise of stock options	—		272		765
Payments to net share settle equity awards	(2,994)		(4,895)		(1,950)
Repurchase of common stock	(12,530)		(45,448)		(5,908)
Dividends paid to stockholders	(13,715)		(15,935)		(9,088)
Net cash provided by financing activities	501,062		491,291		7,329
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(4,118)		2,991		595
Net increase in cash, cash equivalents and restricted cash	3,602		(106,033)		158,087
Cash, cash equivalents and restricted cash at beginning of period	162,075		268,108		110,021
Cash, cash equivalents and restricted cash at end of period	$	165,677	$	162,075	$	268,108

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(dollars in thousands)

SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets as of December 31, 2022, 2021 and2020to the cash, cash equivalents and restricted cash used in the Statement of Cash Flows (in thousands):


	December 31,
	2022		2021		2020
Cash and cash equivalents	$	73,932	$	63,179	$	213,343
Restricted cash (includes restricted cash of consolidated VIEs of $52,277 and $57,155 as of December 31, 2022 and December 31, 2021, respectively)	91,745		98,896		54,765
Total cash, cash equivalents and restricted cash used in the Statement of Cash Flows	$	165,677	$	162,075	$	268,108

The following table provides supplemental cash flow information for the periods indicated (in thousands):


	Year Ended December 31,
	2022		2021		2020
Cash paid for:
Interest	$	162,365	$	81,536	$	69,212
Income taxes, net of refunds	15,646		34,878		15,841
Non-cash investing activities:
Property and equipment accrued in accounts payable	444		883		861

See accompanying Notes to Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS

~~Basis~~Nature of ~~Presentation~~Operations

The terms “CURO"~~, "we,” “our,” “us,”~~ and the ~~“Company,”~~“Company” refer to CURO Group Holdings Corp. and its ~~directly~~direct and ~~indirectly owned~~indirect subsidiaries as a consolidated entity, except where otherwise stated. The term "CFTC" refers to CURO Financial Technologies Corp., a subsidiary of CURO, and its directly and indirectly owned subsidiaries as a consolidatedcombined entity, except where otherwise stated.

The Company is a full-spectrum consumer credit lender serving U.S. and Canadian customers for over 25 years. Our roots in the consumer finance market run deep. We have worked diligently to provide customers a variety of convenient, easily accessible financial services. Our decades of alternative data power a hard-to-replicate underwriting and scoring engine, mitigating risk across the full spectrum of credit products.

In the U.S., CURO operates under several principal brands, including "Covington Credit," "Heights Finance," "Quick Credit," "Southern Finance" and "First Heritage Credit." Until July 2022, CURO also operated under "Speedy Cash," "Rapid Cash" and "Avio Credit." As of December 31, 2022, our store network consisted of 496 U.S. retail locations across 13 states.

In Canada, we operate under “Cash Money” and “LendDirect” direct lending brands and the "Flexiti" point-of-sale brand. As of December 31, 2022, we operated our direct lending and online services in eight Canadian provinces and one Canadian territory. Our point-of-sale operations are available at over 8,400 retail locations and over 3,500 merchant partners across 10 provinces and two territories.

Following the acquisitions in 2022 and 2021, the Company reports Flexiti operations as the "Canada POS Lending" segment and First Heritage and Heights Finance operations within the U.S. Direct Lending segment throughout this 2022 Form 10-K. Refer to Note 1 3 , "Segment Reporting" for further information.

The Company has prepared the accompanying audited Consolidated Financial Statements in accordance with ~~accounting principles generally accepted in~~U.S. GAAP. The Company will continue to take advantage of the ~~United States of America (“US GAAP”).~~

~~The Consolidated Financial Statements and~~scaled disclosure requirements permitted by the accompanying notes (the “Financial Statements”) reflect all adjustments which are, in the opinion of management, necessary to present fairly our results of operations, financial position and cash flowsSEC as a Smaller Reporting Company (SRC) for the periods presented. ~~The adjustments consist solely of normal recurring adjustments.~~

~~We completed our initial public offering ("IPO")~~SRC status is determined on December 11, 2017, and our common stock is trading on the New York Stock Exchange ("NYSE") under the symbol "CURO." Prior to our IPO, on December 6, 2017, we filed a certificate of amendment to our certificate of incorporation on that effected a 36-for-1 split of our common stock. All share and per share data have been retroactively adjusted for all periods presented to reflect the stock split as if the stock split had occurred at the beginning of the earliest period presented. See Note 15 - "Stockholders' Equity" for additional information concerning our IPO and stock split.

~~As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as~~ an ~~“emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.~~

~~An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise generally applicable to public companies. As an emerging growth company:~~

~~we are not required to present selected financial data for any period prior to the earliest audited period presented in our initial registration statement;~~

we are not required to engage an auditor to report on the effectiveness of our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act;

we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding a supplement to the auditor’s report providing additional information about the audit and the financial statements (~~i.e., an auditor discussion and analysis);~~

~~we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”;~~

we are not required to disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation, or to include a compensation committee report, provided we comply with the scaled compensation disclosure rules applicable to smaller reporting companies; and

we may take advantage of an extended transition period for complying with new or revised accounting standards, allowing us to delay the adoption of some accounting standards until those standards would otherwise apply to private companies.

~~We have elected to take advantage of these reduced reporting and other requirements available to us as an emerging growth company.~~

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

We may take advantage of these provisions until we are no longer an emerging growth company. We could remain an emerging growth company until the last day of the fifth fiscal year after our IPO, or until the earliest of the following: (i) the last day of the first fiscal year in which our total annual gross revenues are at least $1.07 billion; (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur as of the end of the fiscal year in which, among other things, the market value of our voting and non-voting common equity securities held by non-affiliates is at least $700.0 millionbasis as of the last business day of ~~our~~the most recently completed second fiscal ~~quarter;~~quarter. Under these rules, the Company met the definition of an SRC as of June 30, 2022 and has elected to continue to report as an SRC. The Company will reevaluate its status as of June 30, 2023.

Revised Revenue Presentation

Beginning in the first quarter of 2022, the Company started reporting "Interest and fees revenue," "Insurance premiums and commissions" and "Other revenue" in place of the previously reported "Revenue" line item in the Consolidated Statements of Operations. Prior period amounts have been reclassified to conform with current period presentation.

Revised Operating Expense Presentation

Beginning in the fourth quarter of 2021, the Company revised its presentation of operating expenses in the Consolidated Statement of Operations. Where applicable, prior period amounts have been reclassified to conform to the current period presentation. These changes had no impact on the Company's previously reported consolidated results of operations or ~~(iii)~~financial position.

U.K. Segment Financial Information Recast for Discontinued Operations

On February 25, 2019, the ~~date~~Company placed its U.K. segment into administration, which resulted in treatment of the U.K. segment as discontinued operations for all periods presented. Throughout this report, financial information for all periods are presented on ~~which we have issued more than $1.0 billion in nonconvertible debt securities during~~a continuing operations basis, excluding the ~~preceding three-year period.~~results and positions of the U.K. segment. See Note 22, "Discontinued Operations" for additional information.

Principles of Consolidation

The Consolidated Financial Statements ~~include~~reflect the accounts of CURO and its ~~wholly-owned subsidiaries.~~direct and indirect subsidiaries, including the divestiture of the Legacy U.S.Direct Lending Business on July 8, 2022 and the acquisition of First Heritage on July 13, 2022. Refer to Note 14, "Acquisitions and Divestiture" for further disclosures related to these acquisitions. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of ~~consolidated financial statements~~the Consolidated Financial Statements in conformity with USU.S. GAAP requires management to make estimates and assumptions, including those impacted by COVID-19, that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. ~~Estimates~~Some estimates may also affect the reported

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

amounts of revenues and expenses during the periods ~~reported. Some of the significant~~presented. Significant estimates that ~~we have~~the Company made in the accompanying Consolidated Financial Statements include ~~allowances for loan losses,~~ALL, certain assumptions related to equity investments, goodwill and intangibles, accruals related to self-insurance, ~~Credit Services Organization ("CSO") guarantee~~CSO liability ~~and~~for losses, estimated tax ~~liabilities.~~liabilities and the accounting for the First Heritage, Heights Finance and Flexiti acquisitions. Actual results may differ from those estimates.

~~Nature~~Acquisitions

First Heritage

On July 13, 2022, CURO closed the acquisition of ~~Operations~~First Heritage, a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, for a total purchase price of $140.0 million in cash.

~~We are~~Heights Finance

On December 27, 2021, CURO closed the acquisition of Heights Finance, a ~~growth-oriented, technology-enabled, highly-diversified~~ consumer finance company ~~serving~~that provides Installment loans and offers customary opt-in insurance and other financial products, for a ~~wide~~total purchase price of $360.0 million ($335.0 million in cash plus $25.0 million in stock).

Flexiti

On March 10, 2021, CURO closed its acquisition of Flexiti, a POS and BNPL provider based in Toronto, Ontario, in a transaction accounted for as a business combination, for a total purchase price of up to $122.5 million ($86.5 million in cash and up to $32.8 million in contingent cash consideration subject to future operating metrics).

Ad Astra

On January 3, 2020, the Company acquired 100% of the outstanding stock of Ad Astra, a related party, for $14.4 million, net of cash received. Prior to the acquisition, Ad Astra was the Company's exclusive provider of third-party collection services for owned and managed loans in the U.S. that are in later-stage delinquency. Ad Astra, now a wholly-owned subsidiary, is included in the Consolidated Financial Statements. Upon the sale of the Legacy U.S. Direct Lending Business in July 2022, Ad Astra continued to service these loans as part of the Transition Services Agreement with Community Choice Financial. In January 2023, the Company ceased operations of Ad Astra. Refer to Note 2 4,"Subsequent Ev ents " for further discussion on Ad Astra.

Refer to Note 14,"Acquisitions and Divestiture" for further information regarding the acquisitions and Note 4 ,"Goodwill and Intangibles " for the impact to the Company's goodwill balance as a result of the acquisitions.

Divestiture

Legacy U.S. Direct Lending Business

On July 8, 2022, the Company completed the divestiture of its Legacy U.S. Direct Lending Business to Community Choice Financial, for total cash of $345.0 million, of which $35.0 million is payable over 12 months. The divestiture resulted in a gain of $68.4 million for the three and nine months ended September 30, 2022, which was recorded in "Gain on sale of business" on the Consolidated Statement of Operations.

As a result of this sale, the Company no longer guarantees loans originated by third-party lenders through CSO programs. As such the Company's results of operations discussed in the following paragraphs only include the results from the CSO program through July 8, 2022.

Refer to Note 14,"Acquisitions and Divestiture" for further information regarding the divestiture and Note 4 , "Goodwill" for the impact to the Company's goodwill balance as a result of the divestiture.

Change in Accounting Principle Related to Equity Method Investment in Katapult

CURO first invested in Katapult in 2017 and increased its investment in later years. Katapult is an e-commerce focused, FinTech company offering an innovative lease financing solution to consumers and enabling essential transactions at the merchant POS. The Company accounted for its investment in Katapult under the equity method of accounting as of December 31, 2022. Refer to Note 5 , "Fair Value Measurements" for further information regarding the accounting for the Company's investment in Katapult.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Historically, the Company reported income and loss from its equity method investment in Katapult on a two-month reporting lag. The merger between Katapult and FinServ in June 2021 triggered a change in Katapult's control environment and reporting structure to coincide with SEC reporting requirements. As a result, during the first quarter of 2021, the Company applied a change in accounting principle to reflect the Company's share of Katapult's historical and ongoing results from a two-month reporting lag to a one-quarter reporting lag. The Company believes this change in accounting principle is preferable as it provides the Company with the ability to present the results of its equity method investment after Katapult’s results are publicly available and related internal controls have been completed. The Company has not retrospectively applied the change in accounting principle because the impact on the financial statements was immaterial for all periods presented.

Impacts of COVID-19

As a result of COVID-19, our customers and their overall credit performance were impacted through the years ended December 31, 2022, 2021 and 2020. We have maintained our historical allowance approach, but have adjusted estimates for changes in past-due gross loans receivable due to market conditions.

Revenue Recognition

CURO offers a broad range of ~~underbanked consumers~~consumer finance products including Revolving LOC, Unsecured Installment, Secured Installment and Single-Pay loans. Revenue in the ~~United States,~~Consolidated Statements of Operations includes: interest income, Merchant Discount Revenue ("MDR"), finance charges, CSO fees, late fees, insurance protection fees, non-sufficient funds fees and other ancillary fees. Product offerings differ and are governed by laws in each jurisdiction.

Revolving LOC revenues include interest income on outstanding revolving balances, MDR related to Canada POS Lending and other usage or maintenance fees as permitted by underlying statutes. Revolving LOC loans have a periodic payment that is a fixed percentage of the ~~United Kingdom~~customer’s outstanding loan balance, and ~~Canada.~~

~~Cash~~

~~We currently maintain cash balances~~there is no defined loan term. The Company records revenue from Revolving LOC loans on a simple-interest basis. Accrued interest and fees are included in gross loans receivable in the ~~United States, Canada~~Consolidated Balance Sheets.

Installment revenue is comprised of both unsecured and secured installment revenue, which includes interest income and non-sufficient-funds or returned-items fees on late or defaulted payments on past-due loans, known as late fees. Late fees comprise less than 1% of Installment revenues. Installment loans are fully amortizing, with a fixed payment amount, which includes principal and accrued interest, due each period during the ~~United Kingdom. At~~loan term. The loan terms for Installment loans can range up to 60 months depending on state or provincial regulations. The Company records revenue from Installment loans on a simple-interest basis. Accrued interest and fees are included in gross loans receivable in the Consolidated Balance Sheets as earned. CSO fees are recognized ratably over the term of the loan as earned. Secured Installment loans are similar to Unsecured Installment loans but are secured by a clear vehicle title or security interest in the vehicle.

Single-Pay loan revenue, a component of installment revenue, consists primarily of unsecured, short-term, small denomination loans, with a small portion being auto title loans, which allow a customer to obtain a loan using their car as collateral. Revenues from Single-Pay loan products are recognized under the Installment revenue product. Revenues are recognized each period on a constant-yield basis ratably over the term of each loan as earned. The Company defers recognition of the unearned fees the Company expects to collect based on the remaining term of the loan at the end of each reporting period.

Insurance premiums, commissions and other revenue includes revenue from a number of financial products such as check cashing, demand deposit accounts, optional credit protection insurance and money transfer services. Check cashing fees, money order fees and other fees from ancillary products and services are generally recognized at the POS when the transaction is completed. The sale of credit protection insurance and additional insurance the Company now offers as a result of the acquisition of Heights Finance and First Heritage are recognized ratably over the term of the loan. The Company is required to maintain an actuarial determined reserve for Heights Finance insurance products due to its reinsurance activities. As of December 31, ~~2017 we have $117.5 million, $36.0~~2022, the reserve was $1.9 million and ~~$8.9 million~~is reported in ~~our cash accounts~~"Accounts payable and accrued liabilities" in the ~~United States, Canada~~Consolidated Balance Sheet.

Merchant Discount Revenue

Following the acquisition of Flexiti, the Company recognizes MDR, which represents a fee charged to merchant partners to facilitate customer purchases at merchant locations. The fee is recorded as unearned revenue when received and recognized over the ~~United Kingdom, respectively.~~expected loan term. The amount of fees charged, or merchant discount, is generally deducted from the payment to the merchant at the time a customer enters into a POS transaction with the merchant. The merchant discount rate is individually

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

negotiated between the Company and each merchant and is initially recorded as deferred revenue upon the completion of each POS transaction.

Cash and cash equivalents

The Company considers deposits in banks and short-term investments with original maturities of 90 days or less as cash and cash equivalents.

Restricted Cash

The Company's restricted cash includes deposits in collateral accounts with financial institutions, consumer deposits related to prepaid cards and checking account programs and funds related to loan facilities disclosed in Note 3 , "Variable Interest Entities." In connection with insurance products offered by Heights Finance, certain of the Company's cash is restricted by agreements with financial institutions to meet certain state licensing requirements as required under various reinsurance agreements. As of December 31, 2022, our restricted cash related balance included $21.4 million for the Heights Finance reinsurance program and $52.3 million held for funding facilities. See Note 3, "Variable Interest Entities" and Note 6, "Debt" for further discussion on these facilities.

Consumer Loans Receivable

Consumer loans receivable are net of the allowance for loan losses, unearned insurance, unearned interest and fees and unamortized fair value discount for acquired loans receivable and are comprised of ~~Single-Pay and~~Revolving LOC, Unsecured Installment, Secured Installment and ~~Open-End Loans. Our~~ Single-Pay ~~Loans~~loans.

Revolving LOC loans are lines of credit without a specified maturity date. Revolving LOC loans require periodic payments of principal and interest that is a fixed percentage of the customer's outstanding loan balance. Customers in good standing may draw against their line of credit, repay with minimum, partial or full payments and redraw as needed.

Unsecured Installment and Secured Installment loans are fully amortizing loans with a fixed payment amount due each period during the term of the loan. The loan terms for Unsecured Installment and Secured Installment loans can range up to 60 months, depending on state regulations. Secured Installment loans are typically collateralized by titled vehicles. Revolving LOC loans are primarily ~~comprised of payday~~unsecured. The product offerings differ by jurisdiction and are governed by the laws in each jurisdiction.

Single-Pay loans ~~and~~are primarily unsecured, short-term, small denomination loans, with a small portion being auto title ~~loans.~~loans, which allow a customer to obtain a loan using their car as collateral. A ~~payday~~Single-Pay loan transaction consists of providing a customer cash in exchange for the customer’s personal check or ~~Automated Clearing House (“ACH”)~~ACH authorization (in the aggregate amount of that cash plus a service fee), with an agreement to defer the presentment or deposit of that check or scheduled ACH withdrawal until the customer’s next payday, which is typically either two weeks or a month from the loan’s origination date. An auto title loan allows a customer to obtain a loan using the customer’s car as collateral for the loan, with a typical loan term of 30 days. Single-Pay loans are classified as Installment loans.

~~Unsecured~~Current and Past-Due Loans Receivable

CURO classifies loans receivable as either current or past due. Single-Pay loans are considered past-due if a customer misses a scheduled payment, at which point the loan is charged-off. If a U.S. Direct Lending customer misses a scheduled payment for Revolving LOC or Installment ~~Secured~~loans, the entire customer balance is classified as past-due and is charged-off when the loan has been contractually past-due for 180 consecutive days. If a Canada Direct Lending or Legacy U.S. Direct Lending customer misses a scheduled payment for Revolving LOC or Installment loans, the entire customer balance is classified as past-due and ~~Open-End Loans require periodic payments~~is charged-off when the loan has been contractually past-due for 90 consecutive days. Canada POS Lending loans historically were charged-off when the loan was contractually past due for 180 days. Beginning January 1, 2023, Canada Direct Lending loans will have the same charge-off policy as U.S. Direct Lending loans. All loan receivables charge-off when notice of principal and interest. Installment Loans are fully amortized loans with a fixed payment amount due each period during the term of the loan. Open-End Loans function much like a revolving line-of-credit, whereby the periodic payment is a set percentage of the customer’s outstanding loan balance, and there is no defined loan term. customer bankruptcy or consumer proposal has been received.

Allowance for Loan Losses

The ~~loan terms~~Company maintains an ALL for ~~Installment Loans can range from 3 to 48 months, depending on state regulations. Installment and Open-End Loans are offered as both Secured auto title~~ loans and interest receivable at a level estimated to be adequate to absorb incurred losses based primarily on the Company's analysis of historical loss or charge-off rates for loans containing similar risk characteristics. The ALL on gross loans receivables reduces the outstanding gross loans receivables balance in the Consolidated Balance Sheets. Changes in the ALL, net of charge-offs and recoveries, are recorded as ~~Unsecured Loan products. The product offerings differ by jurisdiction~~“Provision for losses” in the Consolidated Statements of Operations.

In addition to an analysis of historical loss and ~~are governed by~~charge-off rates, the ~~laws in each separate jurisdiction.~~Company also considers delinquency trends and any macro-economic conditions that it believes may affect portfolio losses. If a loan is deemed to be uncollectible before it is fully reserved

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

~~Current and Past-Due Loans Receivable~~

~~We classify our loans receivable as either current~~based on received information (e.g., receipt of customer bankruptcy notice or ~~past-due. Single-Pay and Open-End Loans are considered past-due when a customer misses a scheduled payment and charged-off to~~death), the ~~allowance for loan losses. The charge-off of Unsecured Installment and Secured Installment Loans was impacted by a change in accounting estimate in the first quarter of 2017.~~

Effective January 1, 2017, we modified the timeframe in which Installment Loans are charged-off and made related refinements to our loss provisioning methodology. Prior to January 1, 2017, we deemed all loans uncollectible and charged-off when a customer missed a scheduled payment andCompany charges off the loan was considered past-due. Because of our continuing shift from Single-Pay to Installment Loan products and our analysis of payment patterns on early-stage versus late-stage delinquencies, we have revised our estimates and now consider Installment Loans uncollectible when the loan has been past-due for 90 consecutive days. Consequently, past-due Installment Loans remain in loans receivable, with disclosure of past-due balances, for 90 days before being charged-off against the allowance for loan losses. We evaluate the adequacy of the allowance for loan losses compared to the related gross receivables balancesat that ~~include accrued interest.~~

In the income statement, the provision for losses for Installment Loans is based on an assessment of the cumulative net losses inherent in the underlying loan portfolios, by vintage, and several other quantitative and qualitative factors. The resulting loss provision rate is applied to loan originations to determine the provision for losses. In addition to improving estimated collectability and loss recognition for Installment Loans, we also believe these refinements are better aligned with industry comparisons and practices.

The aforementioned change is treated as a change in accounting estimate that was applied prospectively effective January 1, 2017. As a result, some credit quality metrics in 2017 may not be comparable to historical periods. Throughout the remainder of this Annual Report, the change in estimate is referred to as “Q1 Loss Recognition Change.”

Installment Loans generally are considered past-due when a customer misses a scheduled payment. Loans zero to 90 days past-due are disclosed and included in gross loans receivable. We accrue interest on past-due loans until charged off. The amount of the resulting charge-off includes unpaid principal, accrued interest and any uncollected fees, if applicable. Consequently, net loss rates that include accrued interest will be higher than under the methodology applied prior to January 1, 2017.

The result of this change in estimate resulted in an approximately $61.0 million of Installment Loans at December 31, 2017 that remained on our balance sheet that were between 1 and 90 days delinquent, as compared to none in the prior year. Additionally, the installment allowance for loan losses as of December 31, 2017 of $69.6 million includes an estimated allowance of $38.7 million for the Installment Loans between 1 and 90 days delinquent, as compared to none in the prior year period.

For Single-Pay and Open-End Loans, past-due loans are charged-off upon payment default and do not return to current for any subsequent payment activity. For Installment Loans, customers with payment delinquency of 90 consecutive days are charged off. Charged-off loans are never returned to current or performing and all subsequent activity is accounted for within recoveries in the Allowance for loan losses. If a past-due Installment Loan customer makes payments sufficient to bring the account current for principal plus all accrued interest or fees pursuant to the original terms of the loan contract before becoming 90 consecutive days past due, the underlying loan balance returns to classification as current. Modifications to the original term of the loan agreement would not result in a loan returning to current classification and only loan customers that are current are eligible for refinancing.

~~Depending upon underlying state or provincial regulations, a borrower may be eligible for more than one outstanding loan.~~

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

~~Allowance for Loan Losses~~

The allowance for loan losses is primarily based on back-testing of subsequent collections history by product and cumulative aggregate net losses by product and by vintage. We do not specifically reserve for any individual loan but rather segregate loans into separate pools based upon loan portfolios containing similar risk characteristics. Additional quantitative factors, such as current default trends, past-due account roll rates and changes to underwriting and portfolio mix are also considered in evaluating the adequacy of the allowance and current provision rates.time. Qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions impact management’s judgment on the overall adequacy of the ~~allowance for loan losses.~~ALL. Any recoveries on loans previously charged to the ALL are credited to the ALL when collected.

Troubled Debt Restructuring

In ~~addition~~certain circumstances, the Company modifies the terms of its loans receivable for borrowers. Under U.S. GAAP, a modification of loans receivable terms is considered a TDR if the borrower is experiencing financial difficulty and the Company grants a concession to the effect on Unsecured and Secured Installment provision rates and loan balances, the Q1 Loss Recognition Change affected comparability of activity in the related allowance for loan losses. Specifically, no Unsecured or Secured Installment Loans were charged-off to the allowance for loan losses in the first quarter of 2017 because charge-off effectively occurs on day 91borrower it would not have otherwise granted under the ~~revised methodology~~terms of the original agreement. The Company modifies loans only if it believes the customer has the ability to pay under the restructured terms. The Company continues to accrue and ~~no affected~~collect interest on these loans ~~originated during~~in accordance with the ~~first quarter reached day 91~~restructured terms.

The Company records its ALL related to TDRs by discounting the estimated cash flows associated with the respective TDR at the effective interest rate immediately after the loan modification and records any difference between the discounted cash flows and the carrying value as an ALL adjustment. A loan that has been classified as a TDR remains so classified until ~~April 2017. Actual charge-offs and recoveries on defaulted/charged-off loans from~~ the ~~first quarter of 2017 affected~~loan is paid off or charged-off. A TDR is charged off consistent with the ~~allowance~~Company's policies for loan losses in prospective periods. But, as discussed previously, the related net losses were recognized in the Consolidated Statements of Income for the year ended December 31, 2017 by applying expected net loss provision rates to the related loan ~~originations.~~product.

Loans Receivable on a Non-Accrual Basis

The Company may place loans receivable on non-accrual status due to statutory requirements or, if in management’s judgment, the timely collection of principal and interest becomes uncertain. After a loan is placed on non-accrual status, no further interest is accrued. Loans remain on non-accrual status until payment or charged-off. Payments are applied initially to any outstanding past due loan balances prior to current loan balances. Not all past-due payments will bring a loan off non-accrual status. The Company's policy for determining past due status is consistent with the accounts receivable aging disclosure.

Credit Services Organization

As a result of the sale of the Legacy U.S. Direct Lending Business on July 8, 2022, the Company no longer guarantees loans originated by third-party lenders through CSO programs. Refer to Note 14, "Acquisitions and Divestiture" for additional information. The paragraphs below outline the Company's accounting for the CSO program through July 8, 2022, the date of the divestiture of the CSO program.

Through ~~our~~the CSO programs, ~~we act~~the Company acted as a ~~credit services organization/credit access business~~CSO/CAB on behalf of customers in accordance with applicable state laws. ~~We currently offer~~The Company offered loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months.Texas. As a CSO, ~~we earn~~CURO earned revenue by charging the customer a CSO fee ~~(the “CSO fee”)~~ for arranging an unrelated third-party to make a loan to that customer. When a customer ~~executes~~executed an agreement with usCURO under ~~our~~the CSO programs, ~~we agree,~~the Company agreed, for a CSO fee payable to usthe Company by the customer, to provide certain services to the customer, one of which iswas to guarantee the customer’s obligation to repay the loan ~~the customer receives from~~to the third-party lender. CSO fees ~~are~~were calculated based on the amount of the customer's outstanding loan. For CSO loans, each lender iswas responsible for providing the criteria by which the customer’s application iswas underwritten and, if approved, determining the amount of the customer loan. WeThe Company was, in turn, ~~are~~ responsible for assessing whether or not ~~we will~~to guarantee the loan. This guarantee ~~represents~~represented an obligation to purchase ~~specific~~ loans if they ~~go in~~were charged-off.

CURO estimated a liability for losses associated with the guaranty provided to ~~default.~~the CSO lenders using assumptions and methodologies similar to the ALL, which was recognized for the consumer loans and included as "Liability for losses on CSO lender-owned consumer loans" on the Consolidated Balance Sheets.

~~As of December 31, 2017,~~For services provided under the ~~maximum amount guaranteed by~~CSO programs, the Company was $65.2 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover some or the entire amount from the customers. We hold no collateral in respect of the guarantees.

These guarantees are performance guarantees as defined in ASC Topic 460. Performance guarantees are initially accounted for pursuant to ASC Topic 460 and recognized at fair value, and subsequently pursuant to ASC Topic 450 as contingent liabilities when we incur losses as the guarantor. The initial measurement of the guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The initial fair value of the guarantee is the price we would pay to a third party market participant to assume the guarantee liability. There is no active market for transferring the guarantee liability. Accordingly, we determine the initial fair value of the guarantee by estimating the expected losses on the guaranteed loans. The expected losses on the guaranteed loans are estimated by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

economic conditions. We review the factors that support estimates of expected losses and the guarantee liability monthly. In addition, because the majority of the underlying loan customers make bi-weekly payments, loan-pool payment performance is evaluated more frequently than monthly.

Our guarantee liability was $17.8 million and $17.1 million at December 31, 2017 and December 31, 2016, respectively. This liability represents the unamortized portion of the guarantee obligation required to be recognized at inception of the performance guarantee in accordance with ASC Topic 460 and a contingent liability for those performance guarantees where it is probable that we will be required to purchase the guaranteed loan from the lender in accordance with ASC Topic 450.

Since CSO loans ~~are~~were made by a third-party lender, ~~we do~~they were not ~~include them~~included in ~~our~~the Company's Consolidated Balance Sheets as loans receivable. CSO fees receivable ~~are~~were included in “Prepaid ~~expense~~expenses and other” in ~~our~~the Consolidated Balance Sheets. ~~We receive~~The Company received cash from customers for these fees on their scheduled loan repayment due dates.

~~The impact of the Q1 Loss Recognition Change~~For additional information on CSO loans, refer to the third-party loans we guarantee and the related CSO guarantee liability was approximately $13.0 million of Installment Loans we guaranteed at December 31, 2017 between 1 and 90 days delinquent, as compared to none in the prior year period. Additionally, the installment CSO guarantee liability as of December 31, 2017 of $17.8 million includes an estimated liability of $9.0 million for the Installment Loans guaranteed by us between 1 and 90 days delinquent, as compared to none in the prior year period.Note 20 , "Credit Services Organization."

Variable Interest ~~Entity~~Entities

As part of ~~our~~its funding strategy and ~~as part of our~~ efforts to support ~~our~~the liquidity from sources other than ~~our~~the traditional capital market sources, wethe Company established a securitization program through ~~a U.S.~~the Heights SPV, ~~Facility. We transferred~~First Heritage SPV, Flexiti SPV, Flexiti Securitization and Canada SPV facilities. See Note 3 , "Variable Interest Entities" and Note 6 , "Debt" for further discussion on these facilities. The

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Company transfers certain consumer loan receivables to ~~a wholly-owned, bankruptcy-remote special purpose subsidiary (“VIE”),~~the VIEs that issues term notes backed by the underlying consumer loan receivables ~~and~~which are serviced by ~~another~~other wholly-owned ~~subsidiary.~~subsidiaries.

~~We are required to evaluate this VIE for consolidation. We have~~For each facility, the Company has the ability to direct the activities of the VIE that most significantly impact the economic performance of the entities as the servicer of the securitized loan receivables. Additionally, ~~we have~~CURO has the right to receive residual payments, which ~~expose us~~exposes the Company to ~~potentially~~the potential for significant losses and returns. Accordingly, wethe Company determined that wethey are the primary beneficiary of the ~~VIE~~VIEs and are required to consolidate them. ~~See Note 5 —"Variable Interest Entities" for further discussion~~

Derivatives

As foreign currency exchange rates change, translation of ~~our VIEs.~~

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

~~Cash Flow Hedge~~

~~We had~~the financial results of the Canadian operations into U.S. Dollars are impacted. Operations in Canada represent a significant portion of total operations, and material changes in the currency exchange rates as between these two countries could have a significant impact on the Company's consolidated financial condition, results of operations or cash flows. The Company may elect to purchase derivatives to hedge exposures that would qualify as a cash flow hedge in which the hedging instrument was a forward extra to sell GBP 4,800,000 that expired in May 2017. We performed an assessment that determined that all critical terms of the hedging instrument and the hedged transaction match and as such qualitatively concluded that changes in the hedge’s intrinsic value would completely offset the change in the expected cash flows based on changes in the spot rate. Since the effectiveness of this hedge was assessed based on changes in the hedge’s intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness. We recorded the hedge’sor fair value hedge. The Company records derivative instruments at fair value as either an asset or liability on the ~~balance sheet in current liabilities.~~

Consolidated Balance Sheet. Changes in the ~~hedge’s~~derivative instruments' intrinsic value, to the extent that they ~~were~~are effective as a hedge, ~~were~~are recorded in ~~other~~Other comprehensive income (loss). For derivatives that qualify and have been designated as cash flow or fair value hedges for accounting purposes, the changes in ~~prior periods. Upon expiration of~~fair value have no net impact on earnings, to the ~~hedge~~extent the derivative is considered perfectly effective in ~~May 2017 we recorded a realized loss of $0.3 million~~achieving offsetting changes in ~~our consolidated statement of income associated with this hedge.~~

fair value or cash flows attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). During the year ended December 31, 2022, the Company entered into interest rate swaps on both the Flexiti SPV and Flexiti Securitization facilities. See Note 6, "Debt" for further discussion on these facilities.

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation and amortization, except for property and equipment accounted for as part of a business combination, which is carried at fair value as of the acquisition date less accumulated depreciation and amortization. Expenditures for ~~major~~significant additions and improvements are capitalized. Maintenance repairs and renewals, ~~which neither~~that do not materially add to the fixed asset's value ~~nor~~or appreciably prolong its life, are charged to expense as incurred. Gains and losses on dispositions of property and equipment are included in results of operations.

The estimated useful lives for furniture, fixtures and equipment are five years to seven years. The estimated useful lives for leasehold improvements can vary from five years to 15 years, not to exceed the remaining term of the lease. Depreciation and amortization are computed using the ~~shorter of~~straight-line method over the estimated useful ~~life~~lives of the ~~asset,~~depreciable or ~~the term of the lease, and vary from one year to fifteen years.~~amortizable assets.

~~Goodwill and Other Intangible Assets~~Business Combination Accounting

Our impairment testing for goodwill and indefinite-lived intangible assets is performed annually during the fourth quarter. However, we test for impairment between our annual tests if an event occurs or if circumstances change that indicateBusiness combination accounting requires that the ~~asset would be impaired, or, in the case of goodwill, that~~Company determines the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed and contingent consideration issued in a ~~reporting unit~~business combination. The cost of the acquisition is ~~below its carrying value. These events~~allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability as of the acquisition date, and any remaining acquisition cost is classified as goodwill. This allocation process requires extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. The Company engages third-party appraisal firms to assist in fair value determination when appropriate. The acquisitions may also include contingent consideration, or ~~circumstances could include a significant change~~earn-out provisions, which provide for additional consideration to be paid to the seller if certain conditions are met in the ~~business climate, a change~~future. These earn-out provisions are estimated and recognized at fair value at the acquisition date based on projected earnings or other financial metrics over specified future periods. These estimates are reviewed during each subsequent reporting period and adjusted based upon actual results. Acquisition-related costs for potential and completed acquisitions are expensed as incurred and included in ~~strategic direction, legal factors,~~"Other operating ~~performance indicators, a change~~expense" in the ~~competitive environment, the sale or disposition~~Consolidated Statements of ~~a significant portion of a reporting unit, or future economic factors.~~Operations.

~~Goodwill~~

Goodwill is initially valued based on the excess of the purchase price of a business combination over the fair value of the acquired net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Intangible assets other than goodwill are initially valued at fair value. When appropriate, ~~we utilize~~the Company utilizes independent valuation experts to advise and assist us in determining the fair value of the identified intangible assets acquired in connection with a business acquisition and in determining appropriate amortization methods and periods for those intangible assets. Any contingent consideration included as part of the purchase is recognized at its fair value on the acquisition date.

~~Our~~

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination at the time of acquisition. In accordance with ASC 350, Intangibles - Goodwill and Other ("ASC 350"), the Company performs impairment testing for goodwill and indefinite-lived intangible assets annually, as of October 1st, or whenever indicators of impairment exist. An impairment would occur if the carrying amount of a reporting unit exceeded the fair value of that reporting unit. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit or economic outlook. The Company recorded an impairment loss on goodwill for the U.S. Direct Lending and Canada POS Lending reporting units during the year-ended December 31, 2022. No impairment was recorded on the Canada Direct Lending during the year-ended December 31, 2022 or any reporting unit for the year ended December 31, 2021.

Goodwill

The annual impairment review for goodwill consists of performing a qualitative assessment to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount as a basis for determining whether or not further testing is required. WeThe Company may elect to bypass the qualitative assessment and proceed directly to the two-step process, for any reporting unit, in any period. WeThe Company can resume the qualitative assessment for any reporting unit in any subsequent period. If ~~we determine,~~the Company determines, on the basis of qualitative factors, that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, wethe Company will then apply a two-step process of (i) determining the fair value of the reporting unit and (ii) comparing it to the carrying value of the net assets

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

allocated to the reporting unit. Management uses both the income approach and market approach to complete its annual goodwill valuation. The income approach uses future cash flows and estimated terminal values for the Company that are discounted using a market participant perspective to determine the fair value. The income approach includes assumptions about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average cost of capital. The market approach calculates the fair value of the invested capital based on the Company’s market capitalization and a comparison to guideline public companies multiples. When performing the two-step process, if the fair value of the reporting unit exceeds it carrying value, no further analysis or write-down of goodwill is required. In the event the estimated fair value of a reporting unit is less than the carrying value, ~~additional analysis is required. The additional analysis compares~~ the carrying amount of the reporting unit’s goodwill with the implied fair value of the goodwill. The use of external independent valuation experts may be required to assist management in determining the fair value of the reporting unit. The implied fair value of the goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair value,Company would recognize an impairment loss equal to such excess, ~~is recognized,~~ which could significantly and adversely impact reported results of operations and ~~shareholders’~~stockholders’ equity. See Note 4 , "Goodwill " for additional information.

During the fourth quarter of 2017, we performed the qualitative assessment for our United States and Canada reporting units. Management concluded that the estimated fair values of these two reporting units were greater than their carrying values. As such, no further analysis was required for these reporting units. We performed the first step of the two-step process for our United Kingdom reporting unit and determined that its implied fair value exceeded its carrying value, and therefore, the second step was not performed and no further analysis or write-down of goodwill was required.

During the fourth quarter of 2016, we performed the first step of the two-step process and determined that the implied fair value of our reporting units exceed their carrying values, and therefore, the second step was not performed and no further analysis or write-down of goodwill was required.

During the third quarter of 2015, due to the declines in our overall financial performance in the United Kingdom, we determined that a triggering event had occurred requiring an impairment evaluation of our goodwill and other intangible assets in the United Kingdom. As a result, during the third quarter of 2015, we recorded non-cash impairment charges of $2.9 million which were comprised of a $1.8 million charge related to the Wage Day trade name, a $0.2 million charge related to the customer relationships acquired as part of the Wage Day acquisition, and a $0.9 million non-cash goodwill impairment charge in our U.K. reporting segment.

For the U.K. reporting unit, the estimated fair value as determined by the Discounted Cash Flow (“DCF”) model was lower than the associated carrying value. As a result, management performed the second step of the impairment analysis in order to determine the implied fair value of the U.K.’s goodwill. The results of the second-step analysis indicated that the implied fair value of goodwill was £17.7 million. Therefore, in 2015, we recorded a non-cash goodwill impairment charge of £0.6 million ($0.9 million). The key assumptions used to determine the fair value of the U.K. reporting unit included the following: (a) the discount rate was 11%; (b) terminal period growth rate of 2.0%; and (c) effective combined tax rate of 20%.

During the 2015 annual review of goodwill, we performed the qualitative assessment for our United States and Canada reporting units. Management concluded that it was not more likely than not that the estimated fair values of these two reporting units were less than their carrying values. As such, no further analysis was required for these reporting units. As part of this annual impairment test in the fourth quarter, we reviewed our analysis done in the third quarter for the United Kingdom and updated projections as appropriate. Management concluded as a result of this analysis that it was not more likely than not that the estimated fair values of the reporting units were less than their carrying values.

The impairment of the goodwill on our U.K. reporting unit resulted primarily from changes to the regulatory environment in the United Kingdom that resulted in management’s downward revision of its cash flow projections for the U.K. reporting unit. The primary driver of decreased volumes in the United Kingdom was the direct result of regulatory changes, primarily the new Financial Conduct Authority (“FCA”) rules that took effect on July 1, 2014, which reduced loan refinancing transactions from three to two and reduced the number of continuous payment authority attempts from three to two. Additionally, the FCA implemented a rate cap on high-cost short-term credit products that took effect on January 2, 2015. This price cap includes three components: 1) an initial cap of 0.8% of the outstanding principal per day; 2) a default fee fixed rate of £15; and 3) a total cost of credit cap of 100% of the total amount borrowed applying to all interest, fees and charges. With the imposition of the new rate cap, we

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

ceased offering any new Installment Loan products in the United Kingdom in favor of a new rate capped Single-Pay Loan product. Additionally, the increase in compliance requirements has driven up the administrative costs necessary to operate in the United Kingdom. We modeled the impact of all of these regulatory changes in the projections used in our second-step analysis.

~~Other~~ Intangible Assets

~~Our~~The Company's identifiable intangible assets, ~~which resulted~~resulting from business combinations and internally developed capitalized software, consist of trade names, developed technology, merchant relationships, customer relationships and computer software. See Note 14, "Acquisitions and Divestiture" for additional information on intangible assets resulting from business combinations.

The Company applied the guidance under ASC 350 to software that is purchased or internally developed. Under ASC 350, eligible internal and external costs incurred for the development of computer software ~~provincial licenses, franchise agreements~~applications, as well as for upgrades and ~~positive leasehold interests.~~enhancements that result in additional functionality of the applications, are capitalized to "Intangibles, net" in the Consolidated Balance Sheets. Internal and external training and maintenance costs are charged to expense as incurred or over the related service period. When a software application is placed in service, the Company begins amortizing the related capitalized software costs using the straight-line method over its estimated useful life, which ranges from three to 10 years.

The ~~“Wage Day” and~~ “Cash Money” trade ~~names were~~name was determined to be an intangible ~~assets~~asset with an indefinite ~~lives.~~life. Intangible assets with indefinite lives are not amortized, ~~and~~but instead are tested annually for impairment and ~~are also~~ reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset might not be recoverable. Impairment of identifiable intangible assets with indefinite lives occurs when the fair value of the asset is less than its carrying amount. If deemed impaired, the asset’s carrying amount is reduced to its estimated fair value.

~~In the fourth quarters of 2017 and 2016, we tested these~~ No indefinite life intangible ~~assets with indefinite lives for impairment and concluded that no impairment exists as the fair value of these assets is greater than its carrying amounts.~~

~~In our interim analysis~~impairments were recorded during the third quarter of 2015 mentioned above, we estimated the fair value of the Wage Day trade name using the relief-from-royalty method, which utilized several significant assumptions, including management projections of future revenue, a royalty rate, a long-term growth rate, years ended December 31, 2022, 2021 or 2020. See Note 4 , "Goodwill and ~~a discount rate. As these assumptions are largely unobservable, the estimate of fair value is considered to be unobservable within the fair value hierarchy.~~ Intangibles " for further information.

The significant unobservable inputs included projected revenues with annual growth rates, a royalty rate, a growth rate of 2.0% in the terminal period, and a discount rate of 15%. The carrying value of the Wage Day trade name exceeded its estimated fair value by £1.2 million. Accordingly, we recorded an impairment charge of £1.2 million ($1.8 million) during 2015, which was included in Goodwill and intangible asset impairment charges in our Consolidated Statements of Income.

As part of the annual impairment test in the fourth quarter of 2015, we relied on our analysis done in the third quarter for the Wage Day trade name intangible asset. Management concluded as a result of this analysis that the fair value of the asset was equal to its carrying amount.

~~Our~~Company's finite lived intangible assets are amortized over their estimated economic benefit period, generally from three to ~~seven~~ten years. ~~These finite lived~~The Company reviews the intangible assets ~~are reviewed~~ for impairment annually in the fourth quarter or whenever events or changes in circumstances have indicated that the carrying amount of these assets might not be recoverable. If wethe Company were to determine that events and circumstances warrant a change to the estimate of an identifiable intangible asset’s remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from ~~our~~the annual assessment, or other events and circumstances, may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. There were no changes in events or circumstances related to the Company's continuing operations that ~~would cause us~~caused the Company to review ~~our~~the finite lived intangible assets for impairment ~~in 2016~~for the years ended December 31, 2022, 2021 or ~~2017.~~

~~Business Combination Accounting~~

~~We have acquired businesses in~~2020. Additionally, no finite lived impairments were recorded during the ~~past,~~years ended December 31, 2022, 2021 or 2020. See Note 4 , "Goodwill and we may acquire additional businesses in the future. Business combination accounting requires us to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed, and contingent consideration issued in a business combination. The cost of the acquisition is allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability, and any remaining acquisition cost is classified as goodwill. This allocation process requires extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. We engage third-party appraisal firms to assist in fair value determination when appropriate. OurIntangibles" for further information.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

acquisitions may also include contingent consideration, or earn-out provisions, which provide for additional consideration to be paid to the seller if certain future conditions are met. These earn-out provisions are estimated and recognized at fair value at the acquisition date based on projected earnings or other financial metrics over specified periods after the acquisition date. These estimates are reviewed during each reporting period and adjusted based upon actual results. Acquisition-related costs for potential and completed acquisitions are expensed as incurred, and are included in corporate expense in the Consolidated Statements of Income.

Deferred Financing Costs

Deferred financing costs consist of debt issuance costs incurred in obtaining financing. These costs are presented in the ~~balance sheet~~Consolidated Balance Sheets as a direct reduction from the carrying amount of associated debt, consistent with discounts or premiums. The effective interest rate method is used to amortize the deferred financing costs over the life of the ~~notes~~Senior Secured Notes and the straight-line method is used to amortize the deferred financing costs of the ~~Non-Recourse U.S.~~ SPV ~~facility.~~facilities. See Note 6 , "Debt" for additional details on the Company's capital resources.

Fair Value Measurements

The Company determines fair value measurements of financial and non-financial assets and liabilities in accordance with FASB ASC 820, Fair Value Measurements and Disclosures. This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (also referred to as an exit price). This guidance also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. See Note 5 , “Fair Value Measurements” for additional information.

Concentration Risk

Financial ~~Instruments~~instruments that potentially subject the Company to concentrations of credit risk primarily consist of its loans receivable.

Direct Lending operations in the U.S. and Canada are subject to concentration risk at the state and province level. To the extent that laws and regulations are passed that affect the manner in which the Company conducts business in a heavily concentrated market, its financial condition, results of operations and cash flows could be adversely affected. Additionally, the Company's ability to meet its financial obligations could be negatively impacted.

Revenues originated in Ontario and Texas represented approximately 29.2% and 15.3%, respectively, of the Company's consolidated revenues for the year ended December 31, 2022 and 20.2% and 21.0% , respectively, for the year ended December 31, 2021. Revenues originated in Texas, California and Ontario represented approximately 22.6%, 13.6% and 16.6%, respectively, of the Company's consolidated revenues for the year ended December 31, 2020.

Following the acquisition of Heights Finance and First Heritage, which accounted for approximately $769.0 million of gross loans receivable as of December 31, 2022, the Company operates in new U.S. markets, primarily the southern and eastern states. Receivables originated in Ontario, Tennessee and Texas represented approximately 14.8%, 6.2% and 3.0%, respectively, of the Company's consolidated receivables for the year ended December 31, 2022.

The ~~carrying amounts reflected~~Company operates its Canada POS Lending operations with various merchant partners. The Company entered into a merchant relationship with LFL in the ~~Consolidated Balance Sheets~~third quarter of 2021. The revenue contribution from LFL represented approximately 5.9% of the Company's consolidated revenues for the year ended December 31, 2022 and 26.7% of the Company's consolidated receivables as of year ended December 31, 2022.

The Company holds cash ~~loans receivable, borrowings under~~at major financial institutions that often exceed FDIC insured limits. The Company manages its concentration risk by maintaining cash deposits in high quality financial institutions and by periodically evaluating the credit ~~facilities and accounts payable approximate fair value~~quality of the financial institutions holding such deposits. Historically, the Company has not experienced any losses due to their short maturities and applicable interest rates. The outstanding borrowings under our credit facilities are variable interest rate debt instruments and their fair value approximates their carrying value due to the borrowing rates currently available to us for debt with similar terms.such cash concentration.

Leases

~~Deferred Rent~~

~~We have~~Leases entered into ~~operating~~by the Company are primarily for retail stores in certain U.S. states and Canadian provinces. Upon entering into an agreement, the Company determines if an arrangement is a lease.

Typically, a contract constitutes a lease ~~agreements~~if it conveys the right to control the use of an identified property, plant or equipment (an identified asset) for ~~store locations and corporate offices, some~~a period of ~~which contain provisions~~time in exchange for ~~future rent increases or periods in which rent payments are reduced (abated). In accordance with generally accepted accounting principles, we record monthly rent expense equal~~consideration. To determine whether a contract conveys the right to control the ~~total~~use of an identified asset for a period of time, the Company must assess whether, throughout the period of use, the customer has both (i) the right to obtain substantially all of the ~~payments due over the lease term, divided by the number of months~~economic benefits from use of the ~~lease term. The difference between rent expense recorded~~identified asset and (ii) the ~~amount paid is charged~~right to ~~Deferred rent which is reflected as~~direct the use of the identified asset. If the customer has the right to control the use of an identified asset for only a ~~separate line item in the accompanying Consolidated Balance Sheets.~~

~~Advertising Costs~~

~~Advertising costs are expensed as incurred.~~

~~Revenue Recognition~~

~~We offer a broad range~~portion of consumer finance products including Unsecured Installment Loans, Secured Installment Loans, Open-End Loans and Single-Pay Loans. Revenue in the consolidated statements of income includes: interest income, finance charges, CSO fees, late fees and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. Product offerings differ by jurisdiction and are governed by the laws in each separate jurisdiction. Installment Loans include Secured Installment Loans and Unsecured Installment Loans. These loans are fully amortizing, with a fixed payment amount, which includes principal and accrued interest, due each period during the term of the ~~loan. The loan terms~~contract, the contract contains a lease for ~~Installment Loans can range up~~that portion of the term.

Leases classified as finance were immaterial to ~~48 months depending on state or provincial regulations. We record revenue from Installment Loans on a simple-interest basis. Accrued interest and fees~~the Company as of December 31, 2022. Operating leases expire at various times through 2033. Operating leases are included in ~~gross loans receivable in the Consolidated Balance Sheets. CSO fees are recognized ratably over the term~~"Right of ~~the loan.~~

~~Open-End Loans function much like a revolving line-of-credit, whereby the periodic payment is a set percentage of the customer’s outstanding loan balance,~~use asset - operating leases" and ~~there is no defined loan term. We record revenue from Open-End Loans~~"Lease liability - operating leases" on ~~a simple interest basis. Accrued interest and fees are included in gross loans receivable in~~ the Consolidated Balance Sheets.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Single-Pay Loans are primarily unsecured, short-term, small denomination loans, with a very small portion being auto title loans, which allow a customer to obtain a loan using their car as collateral. Revenues from Single-Pay Loan products are recognized each period on a constant-yield basis ratably over the term of each loan. We defer recognition of the unearned fees we expect to collectThe Company recognizes ROU assets and lease liabilities based on the ~~remaining~~present value of lease payments over the lease term at commencement date. The rate implicit in the Company's leases typically are not readily determinable. As a result, the Company uses its estimated incremental borrowing rate, as allowed by ASC 842, Leases, in determining the present value of lease payments. The incremental borrowing rate is based on internal and external information available at the lease commencement date and is determined using a portfolio approach (i.e., using the weighted average terms of all leases in the Company's portfolio). This rate is the theoretical rate the Company would pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term as that of the portfolio.

The Company uses quoted interest rates obtained from financial institutions as an input, adjusted for Company-specific factors, to derive the incremental borrowing rate as the discount rate for the leases. As new leases are added each period, the Company evaluates whether the incremental borrowing rate has changed. If the incremental borrowing rate has changed, the Company will apply the rate to new leases if not doing so would result in a material difference to the ROU asset and lease liability presented on the Consolidated Balance Sheets.

The majority of the leases have an original term up to five years plus renewal options for additional similar terms. The Consumer Price Index is used in determining future lease payments and for purposes of calculating operating lease liabilities. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Most of the leases have escalation clauses and certain leases also require payment of period costs, including maintenance, insurance and property taxes. The Company has elected to combine lease and non-lease components and to exclude short-term leases, defined as having an initial term of ~~the loan at the end of each reporting period.~~

~~Check cashing fees, money order fees and other fees from ancillary products and services are generally recognized at the point-of-sale when the transaction is completed. We also earn revenue~~12 months or less, from the Consolidated Balance Sheets. Some of the leases are with related parties and have terms similar to the non-related party leases. See Note 15 , "R elated Party Transactions " for further information. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

For additional information related to the Company's leases, refer to Note 1 1 , "Leases."

Operating Expenses

Salaries and Benefits—Salaries and benefits include personnel-related costs, including salaries, benefits, bonuses and share-based compensation and are driven by the number of global employees.

Occupancy—Occupancy includes costs related to the Company's leased facilities, including rent, utilities, maintenance, repairs and insurance expense.

Advertising—Advertising costs are expensed as incurred.

Direct operations—Direct operations include costs related to the Company's Direct Lending and POS operations, including collections and financial services fees.

Depreciation and amortization—includes the depreciation and amortization of property and equipment and intangible assets.

Other operating expense—Other operating expense includes office expense, professional fees, security expense, travel and entertainment and non-routine costs such as transaction costs and store closure costs.

Other Expense (Income)

Interest Expense—includes interest related to the Company's Senior Secured Notes, SPV and securitization facilities and Senior Revolvers.

Loss (income) from equity method investment—includes the Company's share of the net income from its equity method investments.

Gain from equity method investment—includes the Company's net gain from its equity method investment.

Loss on extinguishment of debt—includes the Company's loss on early redemption on Senior Secured Notes and early extinguishment of SPVs.

Goodwill impairment—includes the Company's impairment of U.S. Direct Lending and Canada POS Lending reporting units recorded during the fourth quarter of 2022.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Change in fair value of contingent consideration—includes adjustments related to the fair value of the contingent consideration related to the acquisition of Flexiti.

Gain on sale of ~~credit protection insurance~~business—Gain on the divestiture of its Legacy U.S. Direct Lending Business to Community Choice Financial in ~~the Canadian market. Insurance revenues are recognized ratably over the term of the loan.~~July 2022.

Share-Based Compensation

~~We account~~CURO accounts for share-based compensation expense for awards to ~~our~~ employees and directors at the estimated fair value on the grant date. The Company determines the fair value of stock option grants ~~is determined~~ using the Black-Scholes option pricing model, which requires usCURO to make several assumptions including, but not limited to, the risk-free interest rate and the expected volatility of publicly traded stocks ~~from our industry section, which we have determined to include~~in the ~~alternative~~ financial ~~sector. Our~~services industry. The expected option term is calculated using the average of the vesting period and the original contractual term. For RSUs, the value of the award is calculated using the closing market price of the common stock on the grant date for time-based and performance-based RSUs, and using the Monte Carlo simulation pricing model for the market-based RSUs. The Company recognizes the estimated fair value of share-based awards ~~is recognized~~ as compensation expense on a straight-line basis over the vesting period. The Company accounts for forfeitures as they occur for all share-based awards.

In accordance with ASC 718, Compensation - Stock Compensation, the Company may choose, upon vesting of employees' RSUs, to return shares of common stock underlying the vested RSUs to the Company in satisfaction of employees' tax withholding obligations (collectively, "net-share settlements") rather than requiring shares of common stock to be sold on the open market to satisfy these tax withholding obligations. The total number of shares of common stock returned to the Company is based on the closing price of the Company's common stock on the applicable vesting date. These net-share settlements reduced the number of shares of common stock that would have otherwise been outstanding on the open market, and the cash CURO paid to satisfy the employee portion of the tax withholding obligations are reflected as a reduction to "Paid-in capital" in the Company's Consolidated Balance Sheets and Consolidated Statements of Changes in Equity.

Income Taxes

A deferred tax asset or liability is recognized for the anticipated future tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements and for operating loss and tax credit carryforwards. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Realization of the deferred tax assets is dependent on ~~our~~the Company's ability to generate sufficient future taxable income and, if necessary, execution of ~~our~~ tax planning strategies. In the event ~~we determine~~CURO determines that future taxable income, taking into consideration tax planning strategies, may not generate sufficient taxable income to fully realize net deferred tax assets, wethe Company may be required to establish or increase valuation allowances by a charge to income tax expense in the period such a determination is made, which may have a material impact on ~~our~~the Consolidated Statements of ~~Income. Deferred~~Operations. The Company measures deferred tax assets and liabilities ~~are measured~~ using enacted tax rates expected to apply to taxable income in the years in which they expect those temporary differences ~~are expected~~ to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date and it may have a material impact on ~~our~~the Consolidated Statements of ~~Income.~~Operations.

~~We follow~~CURO follows accounting guidance which prescribes a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements ~~uncertain~~unrecognized tax benefits for tax positions taken or expected to be taken on a tax return. Under this guidance, tax positions are initially recognized in the financial statements when it is more likely than not that the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application of this guidance requires numerous estimates based on available information. ~~We consider~~The Company considers many factors when evaluating and estimating ~~our~~ tax positions and tax benefits, and ~~our~~the recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As ~~we obtain~~the Company obtains additional information, wethey may need to ~~periodically~~ adjust ~~our~~the recognized tax positions and tax benefits. For additional information related to ~~uncertain~~unrecognized tax ~~positions,~~benefits, see Note ~~13—"Income~~8 , "Income Taxes."

Foreign Currency Translation

The ~~local currencies are~~Canadian dollar is considered the functional ~~currencies~~currency for ~~our~~ operations in ~~the United Kingdom and~~ Canada. All balance sheet accounts are translated into U.S. dollars at the ~~current~~ exchange rate in effect at each ~~period end.~~balance sheet date. The ~~income statement is~~Statements of Operations are translated at the average rates of exchange ~~for the~~during each period. ~~We have~~The Company has determined

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

that certain ~~of our~~ intercompany balances are long-term in nature, and therefore, currency translation adjustments related to those accounts are recorded as a component of ~~accumulated~~"Accumulated other comprehensive income (loss)" in the Statements of ~~Stockholders’~~Stockholders' Equity. For intercompany balances that are settled on a regular basis, currency translation adjustments related to those accounts are recorded as a component of ~~Other, net~~"Other operating expense" in the Consolidated Statements of ~~Income.~~Operations.

~~Accumulated Other Comprehensive Loss~~

~~The components of Accumulated other comprehensive loss at December 31, 2017 and 2016 were as follows:~~

December 31
(in thousands) 2017 2016
Foreign currency translation adjustment $ (42,939 ) $ (59,652 )
Cash flow hedge —
(333 )
Total $ (42,939 ) $ (59,985 )

~~Recently Adopted Accounting Pronouncements~~

~~In October 2016, the FASB issued Accounting Standards Update (" ASU") 2016-17,~~ ~~“Consolidation (Topic 810): Interests Held Through Related Parties that are Under Common Control"~~ (“ASU 2016-17”). The amendments affected the evaluation of whether to consolidate a Variable Interest Entity ("VIE") in certain situations involving entities under common control. Specifically, the amendments changed the evaluation of whether an entity is the primary beneficiary of a VIE for an entity that is a single decision maker of a variable interest by changing how an entity treats indirect interests in the VIE held through related parties that are under common control with the reporting entity. The guidance in ASU 2016-17 was required to be applied retrospectively to all relevant periods. ASU 2016-17 was effective for us beginning January 1, 2017. The adoption of this ASU did not have a material effect on our Consolidated Financial Statements.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~ (“ASU 2016-09”). The amendments in ASU 2016-09 simplified several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 was effective for us beginning January 1, 2017. The adoption of this ASU did not have a material effect on our Consolidated Financial Statements.

~~In September 2015, the FASB issued ASU 2015-16,~~ ~~Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments~~ (“ASU 2015-16”), which required an acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts were determined and eliminated the requirement to retrospectively account for those adjustments. The new standard became effective for us on January 1, 2017. The amendments in this update were applied prospectively to adjustments to provisional amounts that occurred after the effective date of this update. The adoption of this ASU did not have a material effect on our Consolidated Financial Statements.

~~In August 2014, the FASB issued ASU 2014-15,~~ ~~Presentation of Financial Statements - Going Concern (Subtopic 205-40)~~ (“ASU 2014-15”), which provided new guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements and was intended to enhance the timeliness, clarity and consistency of disclosure concerning such uncertainties. The new guidance required management to perform assessments on an interim and annual basis of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s interim or annual financial statements, as applicable. An entity must provide certain disclosures if there is substantial doubt about the entity’s ability to continue as a going concern. The guidance became effective for us on January 1, 2017. The adoption of ASU 2014-15 did not have a material effect on our Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Legal and Other Commitments and Contingencies

The Company is subject to litigation in the normal course of its business. The Company applies the provisions as defined in the guidance related to accounting for contingencies in determining the recognition and measurement of expense recognition associated with legal claims against the Company. Management uses guidance from internal and external legal counsel on the potential outcome of litigation in determining the need to record liabilities for potential losses and the disclosure of pending legal claims. Refer to Note 7 , "Commitments and Contingencies " for further information.

Recently Issued Accounting Pronouncements Not Yet Adopted

ASU 2016-13 and subsequent amendments

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive income” (ASU 2018-02). Current US GAAP requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the period the change is enacted, including items of other comprehensive income for which the related tax effects are presented in other comprehensive income (“stranded tax effects”). ASU 2018-02 allows, but does not require, companies to reclassify stranded tax effects caused by the 2017 Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. Additionally, the ASU requires new disclosures by all companies, whether they opt to do the reclassification or not. The provisions of ASU 2018-02 are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Companies should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We do not expect that the adoption of this guidance will have a material impact on our Consolidated Financial Statements.

In September 2017, the FASB issued ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments” (ASU 2017-13). This ASU amends the early adoption date option for public business entities related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. We do not expect that the adoption of these amendments will have a material impact on our Consolidated Financial Statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). Under modification accounting, all entities are required to re-value their equity awards each time there is a modification to the terms of the awards. The provisions in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to account for the effects of a modification unless certain conditions are met. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. We do not expect that the adoption of this guidance will have a material impact on our Consolidated Financial Statements.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ ("ASU 2017-04"). The amendments in ASU 2017-04 simplified the goodwill impairment test by eliminating Step 2 of the test which requires an entity to compute the implied fair value of goodwill. Instead, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, and is limited to the amount of total goodwill allocated to that reporting unit. Under this ASU, an entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The provisions of ASU 2017-04 are effective for a public entity's annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and effective for us, as an emerging growth company, in fiscal years beginning after December 15, 2021. We are currently assessing the impact the adoption of ASU 2017-04 will have on our Consolidated Financial Statements and footnote disclosures.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the definition of a Business~~ ("ASU 2017-01"). The amendments in ASU 2017-01 narrow the definition of a business and provide a framework that gives an entity a basis for making reasonable judgments about whether a transaction involves an asset or a business and provide a screen to determine when a set (an integrated set of assets and activities) is not a business. The screen requires a determination that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

a business. If the screen is not met, the amendments in this Update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. ASU 2017-01 is effective prospectively for public companies for annual periods beginning after December 15, 2017 including interim periods therein, and it will be effective for us, as an emerging growth company, for annual periods beginning after December 15, 2018 and interim periods beginning after December 15, 2019. We are currently assessing the impact the adoption of ASU 2017-01 will have on our Consolidated Financial Statements and footnote disclosures.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public companies for fiscal years beginning after December 15, 2017 and interim periods therein, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods beginning after December 15, 2019. The amendments should be applied using a retrospective transition method to each period presented. We are currently assessing the impact the adoption of ASU 2016-18 will have on our Consolidated Financial Statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)~~ (“ASU 2016-15”). The amendments in ASU 2016-15 provide guidance on eight specific cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and beneficial interests in securitization transactions. ASU 2016-15 will be effective for public companies for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. We are assessing the potential impact this ASU will have on our Consolidated Statements of Cash Flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~” ("~~ and subsequent amendments to the guidance: ASU ~~2016-13"). This~~2018-19 in November 2018, ASU ~~modifies~~2019-04 in April 2019, ASU 2019-05 in May 2019, ASU 2019-10 and -11 in November 2019, ASU 2020-02 in February 2020 and ASU 2022-02 in March 2022. The amended standard changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaces the ~~impairment~~current “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost and affects loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual right to ~~utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses.~~ receive cash.

ASU 2016-13 ~~will be~~and related amendments are effective ~~for public companies~~ for fiscal years beginning after December 15, ~~2019 and interim periods within those fiscal years, and it will be effective~~2022 for ~~us,~~entities that qualified as an ~~emerging growth company,~~SRC as of June 30, 2019, such as the Company. ASU 2016-13 and its amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. The Company adopted ASU 2016-13 and the related ASUs effective January 1, 2023. Based on the December 31, 2022 loan portfolio and current expectations, the Company estimates the impact of the adoption, through a modified-retrospective approach, to cause an increase to the allowance for credit losses of $135 million and a corresponding one-time, cumulative reduction to retained earnings of $100 million (net of $35 million in taxes) in the consolidated balance sheet as of January 1, 2023.

ASU 2020-04 and subsequent amendments

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the upcoming market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. Entities can elect to not apply certain modification accounting requirements to contracts affected by this reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities also can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met. The FASB has recently extended the adoption date to December 31, 2024. The FASB also issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope in January 2021, which clarifies that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition. The amendments in this ASU affect the guidance in ASU 2020-04 and are effective in the same timeframe as ASU 2020-04. As of September 30, 2022, the Company has transitioned all debt facilities from LIBOR to SOFR.

ASU 2021-08

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, ~~2020~~2022, and ~~interim periods within fiscal years beginning after December 15, 2021. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.~~

~~In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ (“ASU 2016-02”). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payment arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged and lessees will no longer be provided with a source of off-balance sheet financing. ASU 2016-02 will be effective for public companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Earlyearly adoption is permitted. ~~Lessees (for capital~~While the Company is continuing to assess the timing of adoption and ~~operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply~~the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 will have a ~~modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the~~material effect on its financial statements. ~~The modified retrospective approach would not require any transition accounting for~~

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~ (“ASU 2016-01”) which requires (i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, (ii) public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and (iii) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). This amendment eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. ASU 2016-01 will be effective for public companies for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.

~~In November 2015, the FASB issued ASU No. 2015-17,~~ ~~Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes~~ (“ASU 2015-17”). This amendment eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2017 and interim periods within fiscal years beginning after December 15, 2018. We do not expect that the adoption of this amendment will have a material impact on our Consolidated Financial Statements.

~~In August 2015, the FASB issued ASU 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2015-14”), which deferred the effect date of ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“ASU 2014-09”), for public companies to fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. If we are no longer an emerging growth company as of December 31, 2018, we will be required to adopt the provision of this standard retroactively as of January 1, 2018. In May 2014, the FASB issued ASU 2014-09 which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. We do not expect that the adoption of this amendment will have a material impact on our Consolidated Financial Statements.

NOTE 2 – ~~PREPAID EXPENSES~~LOANS RECEIVABLE AND ~~OTHER~~REVENUE

~~Components~~As a result of ~~Prepaid expenses~~the sale of the Legacy U.S. Direct Lending Business on July 8, 2022, the Company no longer guarantees loans originated by third-party lenders through CSO programs. The Company will continue to present these loans in the tables that follow based on historical practice and ~~other assets are as follows:~~for comparability purposes.

The following table summarizes revenue by product (in thousands):


	For the Year Ended December 31,
		2022		2021		2020
Revolving LOC		$	345,813	$	294,591	$	249,502
Installment		559,594		449,144		538,685
Total interest and fees revenue		905,407		743,735		788,187
Insurance premiums and commissions		88,490		49,410		35,553
Other revenue		32,021		24,698		23,655
Total revenue(1)		$	1,025,918	$	817,843	$	847,396
(1) Includes revenue from CSO programs of $101.2 million, $167.1 million and $185.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following tables summarize loans receivable by product and the related delinquent loans receivable (in thousands):


	December 31, 2022
	Revolving LOC		Installment(1)		Total
Current loans receivable	$	1,194,554	$	649,262	$	1,843,816
1-30 days past-due	46,956		76,709		123,665
31-60 days past-due	17,677		21,480		39,157
61-90 days past-due	12,190		14,143		26,333
91 + days past-due	13,138		41,724		54,862
Total delinquent loans receivable	43,005		77,347		120,352
Total loans receivable	1,284,515		803,318		2,087,833
Less: allowance for losses	(78,815)		(43,213)		(122,028)
Loans receivable, net	$	1,205,700	$	760,105	$	1,965,805
(1) Of the $803.3 million of installment receivables, $12.7 million relate to mandated extended payment options for certain Canada Single-Pay loans.


	December 31, 2021
	Revolving LOC		Installment - Company Owned(1)		Total
Current loans receivable	$	843,379	$	512,207	$	1,355,586
1-30 days past-due	35,657		58,373		94,030
31-60 days past-due	15,452		21,185		36,637
61-90 days past-due	13,397		17,146		30,543
91 + days past-due	6,228		25,294		31,522
Delinquent loans receivable	35,077		63,625		98,702
Total loans receivable	914,113		634,205		1,548,318
Less: allowance for losses	(68,140)		(19,420)		(87,560)
Loans receivable, net	$	845,973	$	614,785	$	1,460,758
(1) Of the $42.5 million of Single-Pay receivables, $11.3 million relate to mandated extended payment options for certain Canada Single-Pay loans.

(dollars in thousands) December 31, 2017 December 31, 2016
Settlements and collateral due from third-party lenders $ 17,943
$ 18,576
Fees receivable for third-party loans 15,059
9,181
Prepaid expenses 6,728
5,892
Other assets 2,782
5,599
Total $ 42,512
$ 39,248

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

~~NOTE 3 – PROPERTY AND EQUIPMENT~~

The ~~classification~~following tables summarize loans Guaranteed by the Company under CSO programs and the related delinquent receivables (in thousands):


	December 31, 2021
	Total Installment - Guaranteed by the Company
Current loans receivable Guaranteed by the Company	$	38,102
1-30 days past-due	6,795
Delinquent loans receivable Guaranteed by the Company	1,420
Total loans receivable Guaranteed by the Company	46,317
Less: Liability for losses on CSO lender-owned consumer loans	(6,908)
Loans receivable Guaranteed by the Company, net	$	39,409


	December 31, 2021
	Total Installment - Guaranteed by the Company
Delinquent loans receivable
31-60 days past-due	$	1,031
61-90 days past-due	285
91 + days past-due	104
Total delinquent loans receivable	$	1,420

The following tables summarize activity in the ALL and the liability for losses on CSO lender-owned consumer loans in total (in thousands):


	For the Year Ended December 31, 2022
	Revolving LOC		Installment		Other		Total
Allowance for loan losses:
Balance, beginning of period	$	68,140	$	19,420	$	—	$	87,560
Charge-offs	(162,587)		(221,197)		(11,443)		(395,227)
Recoveries	27,976		85,033		1,401		114,410
Net charge-offs	(134,611)		(136,164)		(10,042)		(280,817)
Provision for losses	166,414		173,810		10,042		350,266
Divestiture (2)	(13,555)		(13,691)		—		(27,246)
Effect of foreign currency translation	(7,573)		(162)		—		(7,735)
Balance, end of period	$	78,815	$	43,213	$	—	$	122,028

Liability for losses on CSO lender-owned consumer loans: (1)
Balance, beginning of period	$	—	$	6,908	$	—	$	6,908
Decrease in liability	—		(1,280)		—		(1,280)
Divestiture (2)	—		(5,628)		—		(5,628)
Balance, end of period	$	—	$	—	$	—	$	—
(1) All balances in connection with the CSO programs were disposed of on July 8, 2022 upon the divestiture of the Legacy U.S. Direct Lending Business.
(2) Write off of the ALL or liability for losses on CSO lender-owned consumer loans related to loan balance sold or guarantees transferred from the Company on July 8, 2022 upon the divestiture of the Legacy U.S. Direct Lending Business.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


	For the Year Ended December 31, 2021
	Revolving LOC		Installment		Other		Total
Allowance for loan losses:
Balance, beginning of period	$	51,958	$	34,204	$	—	$	86,162
Charge-offs	(114,827)		(191,734)		(3,911)		(310,472)
Recoveries	29,454		107,147		1,810		138,411
Net charge-offs	(85,373)		(84,587)		(2,101)		(172,061)
Provision for losses	102,457		69,766		2,101		174,324
Effect of foreign currency translation	(902)		37		—		(865)
Balance, end of period	$	68,140	$	19,420	$	—	$	87,560

Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period	$	—	$	7,228	$	—	$	7,228
Decrease in liability	—		$	(320)	—		$	(320)
Balance, end of period	$	—	$	6,908	$	—	$	6,908

As of ~~property~~December 31, 2022, Revolving LOC and ~~equipment is~~Installment loans classified as ~~follows:~~

(dollars in thousands) December 31, 2017 December 31, 2016
Leasehold improvements $ 126,897
$ 122,419
Furniture, fixtures and equipment 36,488
35,060
Property and equipment, gross 163,385
157,479
Accumulated depreciation (76,299 ) (61,583 )
Property and equipment, net $ 87,086
$ 95,896

~~Depreciation expense was $16.7 million, $15.4~~non-accrual were $5.3 million and ~~$14.5~~$54.6 million, ~~for~~respectively. As of December 31, 2021, Revolving LOC and Installment loans classified as non-accrual were $5.9 million and $41.4 million, respectively. The Company inherently considers non-accrual loans in its estimate of the ~~years~~ALL.

TDR Loans Receivable

The table below presents TDRs that are related to the Customer Care Program implemented in response to COVID-19, included in both gross loans receivable and the impairment included in the ALL (in thousands):


	As of December 31, 2022		As of December 31, 2021
Current TDR gross receivables	$	10,169	$	11,580
Delinquent TDR gross receivables	2,635		5,066
Total TDR gross receivables	12,804		16,646
Less: Impairment included in the allowance for loan losses	(2,691)		(3,632)
Less: Additional allowance	(660)		(2,212)
Outstanding TDR receivables, net of impairment	$	9,453	$	10,802

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The tables below present loans modified and classified as TDRs during the periods presented (in thousands):


	For the Year Ended December 31,
		2022		2021		2020

Pre-modification TDR loans receivable		$	9,030	$	16,255	$	38,930
Post-modification TDR loans receivable		8,702		14,538		34,252
Total concessions included in gross charge-offs		$	328	$	1,717	$	4,678

There were $5.4 million and $14.0 million of loans classified as TDRs that were charged off and included as a reduction in the ALL during the year ended December 31, ~~2017, 2016~~2022 and ~~2015,~~2021, respectively. The Company had commitments to lend additional funds of $1.4 million to customers with available and unfunded Revolving LOC loans classified as TDRs as of December 31, 2022.

The table below presents the Company's average outstanding TDR loans receivable, interest income recognized on TDR loans and number of TDR loans for the periods presented (dollars in thousands):


	For the Year Ended December 31,
		2022		2021		2020
Average outstanding TDR loans receivable		$	11,065	$	18,259	$	20,631
Interest income recognized		5,320		18,328		17,074
Number of TDR loans		3,531		11,693		27,082

NOTE 3 – VARIABLE INTEREST ENTITIES

As of December 31, 2022, the Company had five credit facilities, whereby certain loans receivable were sold to wholly-owned VIEs to collateralize debt incurred under each facility. See Note 6 , "Debt " for additional details on each facility.

The Company has determined that it is the primary beneficiary of the VIEs and is required to consolidate them. The Company includes the assets and liabilities related to the VIEs in the Consolidated Financial Statements.

The carrying amounts of consolidated VIEs' assets and liabilities were as follows (in thousands):


	December 31, 2022		December 31, 2021
Assets
Restricted cash	$	52,277	$	57,155
Loans receivable, net	1,855,824		1,228,088
Prepaid expenses and other	12,908		—
Deferred tax assets	17,027		—
Total Assets	$	1,938,036	$	1,285,243
Liabilities
Accounts payable and accrued liabilities	$	13,571	$	9,886
Deferred revenue	31		106
Deferred tax liability	—		269
Accrued interest	7,023		3,279
Income taxes payable	7,850		—
Debt, net	1,589,380		965,072
Total Liabilities	$	1,617,855	$	978,612

NOTE 4 – GOODWILL AND INTANGIBLES

Goodwill

The Goodwill balance includes impairments recorded on the U.S. Direct Lending and Canada POS Lending reporting units in the fourth quarter of 2022. The change in the carrying amount of ~~goodwill~~Goodwill by operating segment, known as reporting unit for goodwill testing purposes, for the years ~~2017~~ended December 31, 2022 and ~~2016~~2021, was as follows (in thousands):

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


	U.S. Direct Lending		Canada Direct Lending		Canada POS Lending		Total
Goodwill at December 31, 2020	$	105,922	$	30,169	$	—	$	136,091
Foreign currency translation	—		(64)		(515)		(579)
Measurement period adjustment	—		—		(4,478)		(4,478)
Acquisition (Note 14)	253,857		—		44,901		298,758
Goodwill at December 31, 2021	359,779		30,105		39,908		429,792
Foreign currency translation	—		(1,847)		(2,494)		(4,341)
Measurement period adjustment	11,825		—		—		11,825
Divestiture (Note 14)	(91,131)		—		—		(91,131)
Acquisition (Note 14)	75,365		—		—		75,365
Goodwill Impairment Charge	(107,827)		—		(37,414)		(145,241)
Goodwill at December 31, 2022	$	248,011	$	28,258	$	—	$	276,269

The Company tests goodwill at least annually for potential impairment, as of October 1, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The indicators include, among others, declines in sales, earning or cash flows or the development of a material adverse change in business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a reporting unit. See Note 1, "Summary of Significant Accounting Policies and Nature of Operations" for additional information on the Company's policy for assessing goodwill for impairment.

During the fourth quarter of 2022, the Company performed a quantitative assessment for each of its reporting units. Management considered the income approach and the guideline public company approach in determining a fair value for each of the three reporting units for purposes of testing the goodwill. Management utilized both the income approach and guideline public company approach equally weighted at 50% to estimate fair value. The income approach estimates fair value using the present value of future cash flows and the guideline public company approach estimates fair value using the fair value of publicly traded businesses in a similar line of business.

Management determined that the fair value of each of the U.S. Direct Lending and Canada POS Lending reporting units were less than their respective carrying values. As a result, the Company recognized a non-cash pre-tax impairment charge of $107.8 million on the U.S. Direct Lending reporting unit and $37.4 million on the Canada POS Lending reporting unit during the year ended December 31, 2022 to write down the carrying value of goodwill. The non-cash impairment charge is included in Goodwill impairment in the Consolidated Statements of Operations for the year ended December 31, 2022.

Management concluded that the estimated fair value of the Canada Direct Lending reporting unit was greater than its carrying value, as ~~follows:~~of the annual assessment date. As such, no impairment was required on the Canada Direct Lending reporting unit.

The Company performed a qualitative assessment for its reporting units as of December 31, 2022. As a result of the earlier triggering event review, the Company concluded an additional assessment was not necessary and did not record an additional impairment loss during the quarter ended December 31, 2022.

Flexiti Acquisition

The Company completed the acquisition of Flexiti on March 10, 2021, resulting in $39.9 million of goodwill as of December 31, 2021, based on the excess of the purchase price over the fair value of the acquired net assets. Goodwill of $39.9 million was net of $4.5 million of adjustments upon the conclusion of the measurement period, and a $0.5 million of foreign currency translation impact as of December 31, 2021. See Note 14,"Acquisitions and Divestiture" for more information related to the business combination.

Heights Finance Acquisition

The Company completed the acquisition of Heights Finance on December 27, 2021. Provisional goodwill was estimated at $253.9 million, based on the preliminary valuation. The Company recorded a net $11.8 million of adjustments during the fiscal year 2022, resulting in a goodwill balance of $265.7 million, as of December 31, 2022 upon the conclusion of the measurement period. See Note 14,"Acquisitions and Divestiture" for more information related to the business combination.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(dollars in thousands) U.S. U.K. Canada Total
Balance as of December 31, 2015 $ 91,131
$ 54,275
$ 27,707
$ 173,113
Accumulated Impairment Charges —
(28,078 ) —
(28,078 )
Goodwill at December 31, 2015 91,131
26,197
27,707
145,035
Foreign currency translation - 2016 —
(4,315 ) 834
(3,481 )
Balance as of December 31, 2016 91,131
49,960
28,541
169,632
Accumulated Impairment Charges —
(28,078 ) —
(28,078 )
Goodwill at December 31, 2016 91,131
21,882
28,541
141,554
Foreign currency translation - 2017 —
2,078
1,975
4,053
Balance as of December 31, 2017 91,131
52,038
30,516
173,685
Accumulated Impairment Charges —
(28,078 ) —
(28,078 )
Goodwill at December 31, 2017 91,131
23,960
30,516
145,607
Legacy U.S. Direct Lending Business Divestiture

On July 8, 2022 the Company completed the divestiture of its Legacy U.S. Direct Lending Business to Community Choice Financial, for total sale proceeds of $349.2 million, net of working capital adjustments, comprised of $314.2 million of cash received at close and $35.0 million in cash payable in monthly installment payments over the subsequent 12 months. The divestiture resulted in a gain of $68.4 million in the three and nine months ended September 30, 2022, which was recorded in "Gain on sale of business" on the Consolidated Statement of Operations. As part of the sale, $91.1 million of goodwill was written off. See Note 14,"Acquisitions and Divestiture" for more information related to the divestiture.

First Heritage Acquisition

On July 13, 2022, CURO closed the acquisition of First Heritage, a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products for a total purchase price of $140.0 million in cash. Provisional goodwill was recorded at $75.4 million.See Note 14,"Acquisitions and Divestiture" for more information related to the business combination.

Intangibles

Identifiable intangible assets consisted of the following:

December 31, 2017 December 31, 2016
(dollars in thousands) Weighted-Average Remaining Life (Years)
Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization
Trade name 8.2 $ 26,872
$ (20 ) $ 25,046
$ (12 )
Customer relationships 1.3 27,823
(26,137 ) 26,411
(23,603 )
Computer software 9.6 19,230
(14,999 ) 16,429
(13,370 )
Balance, end of year
$ 73,925
$ (41,156 ) $ 67,886
$ (36,985 )


		December 31, 2022						December 31, 2021
	Weighted-Average Remaining Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Assets not subject to amortization
Trade name	—	$	21,432	$	—	$	21,432	$	22,832	$	—	$	22,832
Assets subject to amortization
Merchant relationships	3.3	18,265		(6,610)		11,655		19,459		(3,151)		16,308
Customer relationships	2.4	18,005		(5,957)		12,048		20,285		(10,295)		9,990
Computer software(1)	5.4	101,899		(30,833)		71,066		81,844		(25,453)		56,391
Trade name	11.6	8,411		(935)		7,476		4,621		(212)		4,409
Balance, end of year		$	168,012	$	(44,335)	$	123,677	$	149,041	$	(39,111)	$	109,930
(1) Includes internally developed software, of $60.6 million and $44.7 million, net, as of December 31, 2022 and 2021, respectively.

~~Our~~

The Company's identifiable intangible assets are amortized using the straight-line method over the estimated remaining useful lives, except for the ~~Wage Day and~~ Cash Money trade name intangible ~~assets~~asset that ~~have~~has a ~~combined~~ carrying amount of ~~$26.8~~$21.4 million, which ~~were~~was determined to have an indefinite ~~lives~~life and ~~are~~is not amortized. The estimated useful lives for ~~our~~the Company's other intangible assets range from 1one to 1015 years. Aggregate amortization expense related to identifiable intangible assets was $22.8 million, $13.8 million and $3.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table outlines the estimated amortization expense related to intangible assets held at December 31, 2022 for each of the next five years (in thousands):


	Year Ending December 31,
2023	$	23,817
2024	21,859
2025	16,947
2026	6,158
2027	4,252

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 5 – FAIR VALUE MEASUREMENTS

~~identifiable intangible assets was $2.4 million, $3.5 million and $4.6 million~~Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company is required to use valuation techniques that are consistent with the market approach, income approach and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on observable market data obtained from independent sources, or unobservable inputs, meaning those that reflect the Company's own judgment about the assumptions market participants would use in pricing the asset or liability based on the best information available for the ~~years~~specific circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are listed below.

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has access to at the measurement date.

Level 2 – Inputs include quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 – Unobservable inputs reflecting the Company's own judgments about the assumptions market participants would use in pricing the asset or liability as a result of limited market data. The Company develops these inputs based on the best information available, including its own data.

Financial Assets and Liabilities Carried at Fair Value

The table below presents the assets and liabilities that were carried at fair value on the Consolidated Balance Sheets at December 31, 2022 (in thousands):


			Estimated Fair Value
	Carrying Value December 31, 2022		Level 1		Level 2		Level 3		Total
Financial assets:
Cash Surrender Value of Life Insurance	$	7,591	$	7,591	$	—	$	—	$	7,591
Derivative assets	7,458		—		7,458		—		7,458
Financial liabilities:
Non-qualified deferred compensation plan	$	5,149	$	5,149	$	—	$	—	5,149
Contingent consideration related to acquisition	16,884		—		—		16,884		16,884

Derivative Assets

The Company uses interest rate swaps to manage interest rate risk exposure on variable rate debt. The Company typically classifies these derivatives as Level 2, given that significant inputs can be observed in a liquid market and the model itself does not require significant judgment. These derivative assets are included in other assets on the Consolidated Balance Sheets. During the year ended December 31, ~~2017, 2016 and 2015, respectively.~~

~~The following table outlines~~2022, Flexiti entered into interest rate swaps with National Bank of Canada to protect against the ~~estimated future amortization expense related to intangible assets held at December 31, 2017:~~

(dollars in thousands) Year Ending December 31,
2018 $ 2,641
2019 1,889
2020 555
2021 128
2022 128

~~NOTE 5 - VARIABLE INTEREST ENTITIES~~

~~In 2016, we closed a financing facility whereby certain loan receivables were sold to wholly-owned, bankruptcy-remote special purpose subsidiaries (VIEs) and additional debt was incurred through~~interest risk on the ~~ABL~~Flexiti SPV variable rate borrowing facility and with Bank of Montreal (BMO) to protect against the ~~Non-Recourse U.S. SPV facility (See~~ ~~Note 11 Long-Term Debt~~ ~~for further discussion) that was collateralized by these underlying loan receivables.~~

~~We have evaluated~~interest rate risk on the ~~VIEs for consolidation and we determined that we are~~Flexiti Securitization variable rate borrowing facility. Flexiti is required to hedge the ~~primary beneficiary~~variable interest rate aspect of the ~~VIEs and are required~~SPV under the facility's credit agreement. For additional information on the interest rate swaps, refer to consolidate them. The assets and liabilities related to the VIEs are included in our consolidated financial statements and are accounted for as secured borrowings. We parenthetically disclose on our consolidated balance sheets the VIEs’ assets that can only be used to settle the VIEs' obligations and the VIEs' liabilities if the VIEs’ creditors have no recourse against our general credit.

~~The carrying amounts of consolidated VIEs' assets and liabilities associated with our special purpose subsidiaries were as follows:~~Note 6 , "Debt."

(in thousands) December 31, 2017 December 31, 2016
Assets
Restricted Cash $ 6,871
$ 2,770
Loans receivable less allowance for loan losses 167,706
108,065
Total Assets $ 174,577
$ 110,835
Liabilities
Accounts payable and accrued liabilities $ 12
$ —
Accrued interest 1,266
775
Long-term debt 120,402
63,054
Total Liabilities $ 121,680
$ 63,829

~~NOTE 6 – RESTRICTED CASH~~

At December 31, 2017 and December 31, 2016 we had $23.2 million and $23.8 million, respectively, on deposit in collateral accounts with financial institutions and third-party lenders. At December 31, 2017, approximately $5.2 million and $17.9 million were included as a component of Restricted cash and Prepaid expenses and other, respectively, in our Consolidated Balance Sheets. At December 31, 2016, approximately $5.1 million and $18.7 million were included as a component of Restricted cash and Prepaid expenses and other, respectively, in our Consolidated Balance Sheets.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Contingent consideration related to acquisition

In connection with the acquisition of Flexiti during the first quarter of 2021, the Company recorded a ~~result~~liability for contingent consideration based on the achievement of revenue less NCOs and loan origination targets over the two years following closing of the ~~loan facilities~~acquisition that ~~commenced~~could result in additional cash consideration up to $32.8 million to Flexiti's former stockholders. The fair value of the liability is estimated using the option-based income approach using a Monte Carlo simulation model discounted back to the reporting date. The significant unobservable inputs (Level 3) used to estimate the fair value included the expected future tax benefits associated with the acquisition, the probability that the risk adjusted-revenue and origination targets will be achieved and discount rates. The contingent consideration measured at fair value using unobservable inputs decreased from the initial measurement of $20.6 million as of March 31, 2021 to $16.9 million as of December ~~2016~~31, 2022. The Company paid $1.0 million of contingent consideration in July 2022. For additional information on Flexiti and ~~disclosed in~~ the related contingent consideration, refer to Note ~~5 - Variable Interest Entities, $6.9 million~~14, "Acquisitions and ~~$2.8 million~~Divestiture."

Cash Surrender Value of Life Insurance and Non-qualified deferred compensation plan

The cash surrender value of life insurance is included in “Other assets” in the Company’s Consolidated Balance Sheets. The non-qualified deferred compensation plan offsetting liability is included in “Accounts payable and accrued liabilities” in the Company’s Consolidated Balance Sheets.

The table below presents the assets and liabilities that were ~~included as Restricted cash of consolidated VIE in our~~carried at fair value on the Consolidated Balance Sheets at December 31, ~~2017~~2021 (in thousands):


			Estimated Fair Value
	Carrying Value December 31, 2021		Level 1		Level 2		Level 3		Total
Financial assets:
Cash Surrender Value of Life Insurance	$	8,242	$	8,242	$	—	$	—	$	8,242
Financial liabilities:
Non-qualified deferred compensation plan	$	5,109	$	5,109	$	—	$	—	$	5,109
Contingent consideration related to acquisition	26,508		—		—		26,508		26,508

Financial Assets and Liabilities Not Carried at Fair Value

The table below presents the assets and liabilities that were not carried at fair value on the Consolidated Balance Sheets at December 31, 2022 (in thousands):


			Estimated Fair Value
	Carrying Value December 31, 2022		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	73,932	$	73,932	$	—	$	—	$	73,932
Restricted cash	91,745		91,745		—		—		91,745
Loans receivable, net	1,965,805		—		—		1,965,805		1,965,805
Investment in Katapult	23,915		20,624		—		—		20,624
Financial liabilities:
7.50% Senior Secured Notes	$	982,934	$	—	$	466,500	$	—	$	466,500
Heights SPV	393,181		—		—		393,181		393,181
First Heritage SPV	178,622		—		—		182,751		182,751
Flexiti SPV	339,651		—		—		343,565		343,565
Flexiti Securitization	385,054		—		—		387,759		387,759
Canada SPV	292,872		—		—		294,594		294,594

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The table below presents the assets and liabilities that were not carried at fair value on the Consolidated Balance Sheets at December 31, 2021 (in thousands):


			Estimated Fair Value
	Carrying Value December 31, 2021		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	63,179	$	63,179	$	—	$	—	$	63,179
Restricted cash	98,896		98,896		—		—		98,896
Loans receivable, net	1,460,758		—		—		1,460,758		1,460,758
Investment in Katapult	27,900		72,627		—		—		72,627
Financial liabilities:
Liability for losses on CSO lender-owned consumer loans (1)	$	6,908	$	—	$	—	$	6,908	$	6,908
7.50% Senior Secured Notes	980,721		—		1,005,700		—		1,005,700
U.S. SPV (1)	45,392		—		—		49,456		49,456
Canada SPV	157,813		—		—		160,533		160,533
Flexiti SPV	172,739		—		—		176,625		176,625
Flexiti Securitization	239,128		—		—		242,886		242,886
Heights Finance SPV	350,000		—		—		350,000		350,000
(1) Liabilities were disposed of when we completed the divestiture of the Legacy U.S. Direct Lending Business on July 8, 2022.

Loans Receivable, Net

Loans receivable are carried on the Consolidated Balance Sheets net of the ALL. The unobservable inputs used to calculate the carrying values include quantitative factors, such as current default trends. Also considered in evaluating the accuracy of the models are changes to the loan portfolio mix, the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. The carrying value of loans receivable approximates their fair value. Refer to Note 2 , "Loans Receivable and Revenue" for additional information.

CSO Program

Following the sale of the Legacy U.S. Direct Lending Business on July 8, 2022, the Company no longer guarantees loans originated by third-party lenders through CSO programs. The Company will continue to present these loans in the tables that follow based on historical practice and for comparability purposes. Refer to Note 14, "Acquisitions and Divestiture" for additional information.

In connection with CSO programs, the Company guaranteed consumer loan payment obligations to unrelated third-party lenders for loans that the Company arranged for consumers on the third-party lenders’ behalf. The Company was required to purchase from the lender charged-off loans that it had guaranteed. Refer to Note 2 , "Loans Receivable and Revenue" and Note 20 , Credit Services Organization" for additional information. All balances in connection with the CSO programs were disposed of with the completion of the divestiture of the Legacy U.S. Direct Lending Business on July 8, 2022.

7.50% Senior Secured Notes, Heights SPV, First Heritage SPV, Flexiti SPV, Flexiti Securitization, Canada SPV, Curo Canada Revolving Credit Facility and Senior Revolver (U.S. SPV and Heights FinanceSPV extinguished during the third quarter of 2022)

The fair value disclosures for the 7.50% Senior Secured Notes as of December 31, 2022 and December 31, 2021 were based on observable market trading data. The fair values of the Heights SPV, First Heritage SPV, Flexiti SPV, Flexiti Securitization, Canada SPV, Curo Canada Revolving Credit Facility and Senior Revolver were based on the cash needed for their respective final settlements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Investment in Katapult

The table below presents the Company's investment in Katapult (in thousands):


	Equity Method Investment		Measurement Alternative (1)		Total Investment in Katapult
Balance at December 31, 2019	$	10,068	$	—	$	10,068
Equity method income	4,546		—		4,546
Accounting policy change for certain securities from equity method investment to measurement alternative	(12,452)		12,452		—
Purchases of common stock warrants and preferred shares	4,030		7,157		11,187
Purchases of common stock	1,570		—		1,570
Balance at December 31, 2020	7,762		19,609		27,371
Equity method income	3,658		—		3,658
Conversion of investment(2)	6,481		(19,609)		(13,128)
Purchases of common stock	9,999		—		9,999
Balance at December 31, 2021	27,900		—		27,900
Equity method loss	(3,985)		—		(3,985)
Balance at December 31, 2022	$	23,915	$	—	$	23,915


(1) The Company elected to measure this equity security without a readily determinable fair value equal to its cost minus impairment. If the Company identifies an observable price change in orderly transactions for same or similar investment in Katapult, it will measure the equity security at fair value as of the date that the observable transaction occurred.
(2) On June 9, 2021, Katapult completed its merger with FinServ. Immediately prior to the merger, the Company first converted all of its preferred stock and exercised all common stock warrants, and then exchanged all shares of Katapult common stock for $146.9 million in cash and 18.9 million shares of common stock in the resulting public company, Katapult (NASDAQ: KPLT). The Company's entire investment in Katapult is now accounted for under the equity method of accounting. The Company recorded a related net gain of $135.4 million on its equity method investment in Katapult, based on the pro rata cost basis of the investment and the discharge of the guarantee provided during the second quarter of 2021.

The Company began investing in Katapult in 2017 and increased its investment through multiple private placement acquisitions. During the first quarter of 2021, the Company changed the two-month reporting lag to a one-quarter reporting lag, as discussed in Note 1, "Summary of Significant Accounting Policies and Nature of Operations." The Company recorded a loss of $1.9 million for the three months ended December 31, 2022 based on its share of Katapult’s earnings.

During the fourth quarter of 2021, the Company purchased an additional 2.6 million shares of common stock of Katapult for an aggregate purchase price of $10.0 million.

On June 9, 2021, Katapult completed its merger with FinServ. As a result, the Company received $146.9 million in cash and 18.9 million shares of common stock of the resulting public company, Katapult (NASDAQ: KPLT). The Company recorded a related net gain of $135.4 million on its equity method investment in Katapult during the second quarter of 2021. Additionally, as part of the merger, CURO received 3.0 million earn-out warrants and holds two of the eight board of director seats for Katapult.

Both the equity method investment and the previously recognized investment measured at cost minus impairment are presented within "Investment in Katapult" on the Consolidated Balance Sheets.

The Company owns 19.5% of Katapult on a fully diluted basis assuming full pay-out of earn-out shares as of December 31, 2022, and 18.2% excluding pay-out of earn-out shares.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 6 – DEBT

As of September 30, 2022, the Company transitioned all variable rate debt facilities utilizing LIBOR to SOFR. Refer to Note 1, "Summary of Significant Accounting Policies and Nature of Operations" for additional details on the transition from LIBOR.

The Company's debt instruments and balances outstanding as of December 31, 2022 and December 31, 2021, including maturity date, effective interest rate and borrowing capacity, were as follows (dollars in thousands):


		Effective interest rate			Outstanding as of
	Maturity Date			Borrowing Capacity	December 31, 2022		December 31, 2021
Corporate Debt:
7.50% Senior Secured Notes	August 1, 2028	7.50	%		$	1,000,000	$	1,000,000

Total corporate debt					1,000,000		1,000,000
Funding Debt:
Heights SPV	July 15, 2025	1-Mo SOFR + 4.25%		$425.0 million	$	400,758	$	—
First Heritage SPV	July 13, 2025	1-Mo SOFR + 4.25%		$225.0 million	182,751		—
Flexiti SPV (1)	September 29, 2025	Weighted average interest rate (4)(7) 8.33%		C$535.0 million	343,565		176,625
Flexiti Securitization (1) (5)	December 9, 2025	1-Mo CDOR + 3.59% (7)		C$526.5 million	387,759		242,886
Canada SPV (1)	August 2, 2026	3-Mo CDOR + 6.00%		C$400.0 million	294,594		160,533
Heights Finance SPV (3)	N/A (3)	1-Mo LIBOR + 5.25%		$350.0 million	—		350,000
U.S. SPV (2)	N/A (2)	1-Mo LIBOR + 6.25%		$200.0 million	—		49,456
Curo Canada Revolving Credit Facility (1)(6)	On-demand	Canada Prime Rate + 1.95%		C$5.0 million	—		—
Senior Revolver	August 31, 2023	1-Mo SOFR + 5.00%		$40.0 million	35,000		—
Total funding debt					$	1,644,427	$	979,500
Less: debt issuance costs					(37,113)		(33,707)
Total Debt					$	2,607,314	$	1,945,793
(1) Capacity amounts are denominated in Canadian dollars, whereas outstanding balances as of December 31, 2022 and December 31, 2021 are denominated in U.S. dollars. The exchange rate applied at December 31, 2022 was 0.7365 and the exchange rate at December 31, 2021 was 0.7846.
(2) The U.S. SPV was extinguished on July 8, 2022 upon the divestiture of the Legacy U.S. Direct lending Business.
(3) The Heights Finance SPV was extinguished on July 15, 2022 and replaced as of July 15, 2022 with Heights SPV.
(4) The weighted average interest rate does not include the impact of the amortization of deferred loan origination costs or debt discounts.
(5) The effective rate is 7.09%.
(6) On December 21, 2022, the maximum amount of the CURO Canada Revolving Credit Facility was reduced from C$10.0 million to C$5.0 million, and the facility was cancelled on January 6, 2023.
(7) Swapped to fixed rate via interest rate swap hedging arrangement entered into on July 7, 2022 for Flexiti Securitization and October 11, 2022 for Flexiti SPV.

Corporate Debt

7.50% Senior Secured Notes

In July 2021, the Company issued $750.0 million of 7.50% Senior Secured Notes which mature on August 1, 2028. Interest on the notes is payable semiannually, in arrears, on February 1 and August 1. In December 2021, the Company issued an additional $250.0 million of 7.50% Senior Secured Notes, also maturing on August 1, 2028, to fund the acquisition of Heights Finance. Refer to Note 14,"Acquisitions and Divestiture" for additional details. In connection with the 7.50% Senior Secured Notes, financing costs of $17.1 million were capitalized, net of amortization, and included in the Consolidated Balance Sheets as a component of "Debt." These costs are amortized over the term of the 7.50% Senior Secured Notes as a component of interest expense.

8.25% Senior Secured Notes

In August 2018, the Company issued $690.0 million of 8.25% Senior Secured Notes maturing on September 1, 2025. In connection with the 8.25% Senior Secured Notes, the Company capitalized financing costs of $13.9 million, which were being amortized as a component of interest expense over its term.

During the third quarter of 2021, the 8.25% Senior Secured Notes were extinguished using proceeds from the 7.50% Senior Secured Notes described above. The early extinguishment of the 8.25% Senior Secured Notes resulted in a loss of $40.2 million.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Funding Debt

As of December 31, 2022, the Company had five credit facilities whereby loans receivable were sold to wholly-owned VIEs to collateralize debt incurred under each facility. These facilities are the (i) Heights SPV, (ii) First Heritage SPV, (iii) Canada SPV, (iv) Flexiti SPV and (v) Flexiti Securitization. For further information on these facilities, refer to Note 3 , "Variable Interest Entities".

Heights SPV

On July 15, 2022, we entered into a new $425.0 million non-recourse revolving warehouse facility to replace the incumbent lender's facility and finance future loans originated by Heights Finance. The effective interest rate is 1-month SOFR plus 4.25%. The Company also pays a 0.50% per annum commitment fee on the unused portion of the commitments. The warehouse revolving period matures on July 15, 2025.

First Heritage SPV

On July 13, 2022, concurrently with the closing of the First Heritage acquisition, the Company entered into a $225.0 million non-recourse revolving warehouse facility to replace the incumbent lender's facility and finance future loans originated by First Heritage. The effective interest rate is 1-month SOFR plus 4.25%. The Company also pays a 0.50% per annum commitment fee on the unused portion of the commitments. The warehouse revolving period matures on July 13, 2025.

Flexiti SPV

On September 29, 2022, Flexiti refinanced and increased its Flexiti SPV in order to increase the borrowing capacity from C$500.0 million to C$535.0 million and extend its maturity to September 29, 2025. As of December 31, 2022, the weighted average interest rate was 8.33%. Flexiti also pays a 0.50% per annum commitment fee on the unused portion of the commitments. All other material terms of the revolving warehouse credit facility remain unchanged. The early extinguishment of the Flexiti SPV resulted in a loss of $0.7 million.

Flexiti Securitization

In December 2021, Flexiti Securitization Limited Partnership, a wholly-owned Canadian subsidiary of the Company, entered into the Flexiti Securitization. The facility provides for C$526.5 million with a maturity of December 9, 2025. As of December 31, 2022, the effective interest was one-month CDOR plus 3.59%.

Canada SPV

In August 2018, CURO Canada Receivables Limited Partnership, a wholly-owned subsidiary of the Company, entered into the Canada SPV. During the fourth quarter of 2021 and first quarter of 2022, the Company amended the existing credit facility to, among other things, (i) increase the borrowing capacity from C$175.0 million to C$400.0 million, (ii) reduce borrowing costs and (iii) extend the initial maturity date by three years, to August 2, 2026.. The effective interest rate was 3-month CDOR plus 6.00%. The borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments.

Heights Finance SPV

In December 2021, the Company acquired Heights Finance, including the Heights Finance SPV. Heights Finance entered into the Heights Finance SPV in December 2019 with a total revolving commitment of $350.0 million. The interest rate on the facility is one-month LIBOR plus 5.25%. The Heights Finance SPV was scheduled to mature on December 31, 2024.

The Heights Finance SPV was extinguished on July 15, 2022, using proceeds from the new $425.0 million non-recourse revolving warehouse facility, "Heights SPV," as described above. The early extinguishment of the Heights Finance SPV resulted in a loss of $0.6 million.

U.S. SPV

In April 2020, CURO Receivables Finance II, LLC, a wholly-owned subsidiary of the Company, entered into the U.S. SPV, which provided for $200.0 million of borrowing capacity with an effective interest rate on the Company's borrowings of one-month LIBOR plus 6.25%. The borrower pays the lenders a monthly commitment fee at an annual rate of 0.50% on the unused portion of the commitments. The U.S. SPV was scheduled to mature on April 8, 2024.

The U.S. SPV was extinguished on July 8, 2022 upon the completion of the divestiture of our Legacy U.S. Direct Lending Business to Community Choice Financial. The early extinguishment of the U.S. SPV resulted in a loss of $3.1 million.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Senior Revolver

The Company maintains the Senior Revolver that provides $40.0 million of borrowing capacity, including up to $4.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The current term expires August 31, 2023. The Senior Revolver accrues interest at one-month SOFR plus 5.00%.

Curo Canada Revolving Credit Facility

Curo Canada maintains the Curo Canada Revolving Credit Facility, formerly known as the Cash Money Revolving Credit Facility, which provides short-term liquidity for the Company's Canadian direct lending operations.

The Curo Canada Revolving Credit Facility is collateralized by substantially all of CURO Canada’s assets and contains various covenants that require, among other things, that the aggregate borrowings outstanding under the facility not exceed the borrowing base, as well as restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Curo Canada Revolving Credit Facility bear interest per annum at the prime rate of a Canadian chartered bank plus 1.95%.

On December 21, 2022 the borrowing capacity under the Curo Canada Revolving Credit Facility was reduced from C$10.0 million to C$5.0 million, and the facility was cancelled on January 6, 2023. For additional information on Flexiti and the related contingent consideration, refer to Note 24 , "Subsequent Events ."

Derivative Instruments and Hedging Activities

During the year ended December 31, 2022, the Company entered into interest rate swaps to manage interest rate risk on variable rate debt. The Company designated these risk management derivatives as qualifying cash flow hedges under hedge accounting. The derivative assets are included in other assets on our Consolidated Balance Sheet and changes in the fair value of derivatives are recorded as a component of Accumulated other comprehensive income (“AOCI”). During the year ended December 31, 2022, the hedges were assessed as effective and as such there was no impact to earnings. However, for cash flow hedges during periods in which the forecasted transactions impact earnings, those amounts are reclassified into earnings in the same period during which the forecasted transactions impact earnings and presented in the same line item in the Consolidated Statements of Income as the earnings effect of the hedged items and reflected in operating activities on the Statement of Cash Flows.

Interest Rate Swap on Flexiti SPV

In accordance with the terms of the Flexiti SPV, on October 11, 2022, Flexiti entered into an interest rate swap to protect against the interest risk on the C$390.0 million, variable rate portion of the borrowing facility, with a notional amount of C$390.0 million. As of December 31, 2022, a $0.8 million interest rate swap is included in Other assets and a $0.6 million pre-tax gain is recognized in Other comprehensive income on the Consolidated Balance Sheet as a result of the change in fair value. The swap has a term ending on September 29, 2025.

Interest Rate Swap on Flexiti Securitization

In accordance with the terms of the Flexiti Securitization, on July 7, 2022, Flexiti entered into an interest rate swap to protect against the interest risk on the C$526.5 million, variable rate, borrowing facility, with a notional amount of C$526.5 million. As a result of the swap, the effective interest rate is 7.09%. As of December 31, 2022, a $6.6 million interest rate swap is included in other assets and a $6.6 million pre-tax gain as a result of the change in fair value is recognized in other comprehensive income on the Consolidated Balance Sheet. The swap has a term ending on December 9, 2025.

Ranking and Guarantees

The 7.50% Senior Secured Notes rank senior in right of payment to all of the Company's and its guarantor entities’ existing and future subordinated indebtedness and equal in right of payment with all of the Company's and its guarantor entities’ existing and future senior indebtedness, including borrowings under revolving credit facilities. Pursuant to the Inter-creditor Agreement, these notes and the guarantees will be effectively subordinated to credit facilities and certain other indebtedness to the extent of the value of the assets securing such indebtedness and to liabilities of subsidiaries that are not guarantors.

The 7.50% Senior Secured Notes are secured by liens on substantially all of the Company's and the guarantors’ assets, subject to certain exceptions. At any time prior to August 1, 2024, the Company may redeem (i) up to 40% of the aggregate principal amount of the notes at a price equal to 107.5% of the principal amount, plus accrued and unpaid interest, if any, to the applicable redemption date with the net proceeds to the Company of certain equity offerings; and (ii) some or all of the Notes at a make-whole price. On or after August 1, 2024, the Company may redeem some or all of the Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any, to the applicable date of redemption. The redemption price for the Notes if redeemed during the 12 months beginning (i) August 1, 2024 is 103.8%, (ii) August 1, 2025 is 101.9% and (iii) on or after August 1, 2026 is 100.0%.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Future Maturities of Debt

Annual maturities of outstanding debt for each of the five years after December 31, 2022 are as follows (in thousands):


	Amount
2023	$	35,000
2024	—
2025	1,314,833
2026	294,594
2027	—
Thereafter	1,000,000
Debt (before deferred financing costs and discounts)	2,644,427
Less: deferred financing costs and discounts	37,113
Debt, net	$	2,607,314

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Securities Litigation and Enforcement

In 2018, a putative securities fraud class action lawsuit was filed against the Company and certain of its directors and officers and other related parties in the United States District Court for the District of Kansas, captioned Yellowdog Partners, LP v. CURO Group Holdings Corp., Donald F. Gayhardt, William Baker and Roger W. Dean, Civil Action No. 18-2662 (the "Yellowdog Action"). The suit alleged the Company made misleading statements and omitted material information regarding the Company's efforts to transition the Canadian inventory of products from Installment loans to Revolving LOC loans. The case was resolved in 2020 for $9.0 million, of which the first $2.5 million was paid by the Company and the remainder paid by the Company's insurance carriers. For the year ended December 31, 2022, there was no further expense related to this litigation.

In June and July 2020, three shareholder derivative lawsuits were filed in the United States District Court for the District of Delaware ("Court") against the Company, certain of its directors and officers, and in two of the three lawsuits, a large stockholder. Plaintiffs generally alleged the same underlying facts of the Yellowdog Action. In July 2021, the derivative lawsuits were voluntarily dismissed and plaintiffs refiled two cases in the United States District Court for the District of Kansas. On October 27, 2022, the Court granted final approval of the parties' settlement and dismissed the case with prejudice. The terms of the settlement provided for the implementation of certain corporate governance reforms and a payment of $345,000 in attorneys’ fees and expenses to plaintiffs’ counsel, which was paid by the Company's insurers, and included no admission of liability or wrongdoing by the Company.

Other Legal Matters. The Company is a defendant in certain other litigation matters encountered from time-to-time in the ordinary course of business, some of which may be covered to an extent by insurance. While it is difficult to predict the outcome of any particular proceeding, the Company does not believe the result of any of these matters will have a material adverse effect on the Company's business, results of operations or financial condition.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 8 – INCOME TAXES

Income before taxes and income tax expense (benefit) was comprised of the following (in thousands):


	Year Ended December 31,
	2022		2021		2020
(Loss) income before taxes
U.S.	$	(140,463)	$	86,106	$	59,741
Non-U.S.	(53,697)		(5,549)		20,602
(Loss) income from continuing operations before taxes	$	(194,160)	$	80,557	$	80,343
Current provision (benefit)
Federal	$	16,254	$	21,549	$	(14,585)
State	3,783		4,553		5,959
Foreign	9,120		13,639		3,925
Current provision (benefit)	$	29,157	$	39,741	$	(4,701)
Deferred tax (benefit) provision
Federal	$	(19,691)	$	(5,022)	$	14,949
State	(1,873)		154		(1,247)
Foreign	(16,271)		(13,650)		(3,106)
Deferred tax (benefit) provision	$	(37,835)	$	(18,518)	$	10,596
(Benefit) provision for income taxes	$	(8,678)	$	21,223	$	5,895

Differences between the Company's effective income tax rate computed on net earnings or loss before income taxes and the statutory federal income tax rate were as follows (dollars in thousands):


	Year Ended December 31,
	2022			2021			2020
Income tax (benefit) expense using the statutory federal rate in effect	$	(40,774)		$	16,917		$	16,872
Tax effect of:
Effects of foreign rates different than U.S. statutory rate	3,222			518			(1,236)
State, local and provincial income taxes, net of federal benefit	(2,635)			3,359			6,619
Tax credits	(678)			(802)			(3,188)
Nondeductible expenses	1,801			1,090			564



Valuation allowance	1,349			(275)			(2,686)
Prior year income tax re-determination	(602)			—			—



Share-based compensation	132			(705)			1,119

Gain on sale of business	8,484			—			—
Impairment of Goodwill	22,369			—			—
Federal NOL carryback	—			—			(11,251)
Prior year basis adjustment	—			—			(659)
Change in fair value of contingent consideration	(1,187)			944			—
Other	(159)			177			(259)
Total (benefit) provision for income taxes	$	(8,678)		$	21,223		$	5,895
Effective income tax rate	4.5		%	26.3		%	7.3		%
Statutory federal income tax rate	21.0		%	21.0		%	21.0		%

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic, which, among other things, allowed U.S. federal NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. In 2020, the Company recorded an income tax benefit of $11.3 million due to the differential in income tax rates related to the carryback of NOLs from tax years 2018 and 2019 to years with a higher statutory tax rate.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company's major tax jurisdictions are U.S. federal, various states and Canada (including provinces). In the U.S., the tax years 2018 through 2021 remain open to examination by the taxing authorities as well as tax years 2013 through 2017 to the extent of refund claims resulting from 2018 and 2019 NOL carrybacks. The tax years 2016 ~~respectively.~~through 2021 remain open to examination by the taxing authorities in Canada. As of December 31, 2022, the Company is under income tax examinations in the U.S. by the Internal Revenue Service for tax years 2018 and 2019, in Canada by the Canadian Revenue Agency for tax years ending June 30, 2017 through June 30, 2018 and in Canada by Alberta Treasury Board and Finance for tax years ending December 31, 2018 and December 31, 2019.

The total amount of gross unrecognized tax benefits was $2.0 million and $0.3 million at December 31, 2022 and 2021, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.0 million at December 31, 2022. The Company expects no material change related to its current positions in recorded unrecognized income tax (benefit) liability in the next 12 months.

The Company classifies interest and penalties related to income taxes as other expenses. The Company did not record any interest or penalties related to unrecognized tax benefits during each of the years ended December 31, 2022 and 2021.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):


	Year Ended December 31,
	2022		2021
Balance at the beginning of year	$	250	$	1,100
Additions for tax positions related to prior years	1,648		125
Additions for tax positions related to the current year	60		125
Settlements with taxing authorities	—		(1,100)
Balance at end of year	$	1,958	$	250

The sources of deferred income tax assets (liabilities) are summarized as follows (in thousands):


	Year Ended December 31,
	2022		2021
Deferred tax assets related to:
Loans receivable	$	9,913	$	—
Accrued expenses and other reserves	7,309		2,960
Lease liability	16,055		26,777
Compensation accruals	6,826		5,845
Deferred revenue	1,811		204

State and provincial NOL carryforwards	18,560		15,547
Foreign NOL and capital loss carryforwards	21,378		17,090
Tax credit carryforwards	3,872		3,905
Gross deferred tax assets	85,724		72,328
Less: Valuation allowance	(9,719)		(7,732)
Net deferred tax assets	$	76,005	$	64,596
Deferred tax liabilities related to:
Property and equipment	$	(2,820)	$	(14,950)
Right of use asset	(15,648)		(25,304)
Goodwill and other intangible assets	(2,730)		(9,914)
Prepaid expenses and other assets	(3,055)		(466)
Hedge accounting	(1,859)		—
Loans receivable	—		(4,367)
Gross deferred tax liabilities	(26,112)		(55,001)
Net deferred tax assets	$	49,893	$	9,595

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred tax assets and liabilities are included in the following line items in the Consolidated Balance Sheets (in thousands):


	Year Ended December 31,
	2022		2021
Deferred tax assets	$	49,893	$	15,639
Deferred tax liabilities	—		(6,044)
Net deferred tax assets	$	49,893	$	9,595

As of December 31, 2022, the Company had undistributed earnings of certain foreign subsidiaries of $255.2 million. The Company intends to reinvest its foreign earnings indefinitely in the non-U.S. operations and therefore has not provided for any non-U.S. withholding tax that would be assessed on dividend distributions. If the earnings of $255.2 million were distributed to the U.S., the Company would be subject to estimated Canadian withholding taxes of approximately $12.8 million. The determination of the U.S. state income taxes upon a potential foreign earnings distribution is impractical. In the event the earnings were distributed to the U.S., the Company would adjust its income tax provision for the period and would determine the amount of foreign tax credit that would be available.

A summary of the valuation allowance was as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Balance at the beginning of year	$	7,732	$	5,695	$	8,328
Increase (decrease) to balance charged as expense	1,349		(275)		(2,686)
Increase to balance charged to opening balance sheet of the acquisition	1,044		1,873		—
(Decrease) to balance for the divestiture	(542)		—		—
Increase (decrease) to balance charged to Other comprehensive income	136		392		(378)
Effect of foreign currency translation	—		47		431
Balance at end of year	$	9,719	$	7,732	$	5,695

In general, management believes that the realization of its deferred tax assets is more likely than not based on the expectations of future taxable income; therefore, there was no deferred tax valuation allowance at December 31, 2022, 2021 or 2020 with the exception of the tax benefits from certain carryovers of state and foreign losses and Foreign Tax Credits ("FTC").

As of December 31, 2022, the Company's deferred tax assets from Canadian federal and provincial NOL carryforwards were approximately $34.8 million. The Canadian NOL carryforwards expire in varying amounts between 2033 and 2042. During the tax year ended December 31, 2020, the Company concluded that a planning strategy is prudent and feasible and that it will be implemented if needed to prevent Canadian NOLs from expiring. As such, the Company released a $4.6 million valuation allowance related to these NOLs and had no valuation allowance related to these NOLs as of December 31, 2020. Relying on this tax strategy for most of its Canadian NOLs, as of December 31, 2022, the Company had a valuation allowance of $1.2 million for NOLs without a feasible tax planning strategy. As of December 31, 2022, the Company's deferred tax assets from Canadian capital losses were $1.7 million. These losses can be carried forward indefinitely, however, the Company does not have material sources of generating capital gains, therefore, a full valuation allowance has been recorded against these losses. As of December 31, 2022, the Company had state NOL carryforward deferred tax assets of $3.5 million. These carryforwards expire in varying amounts between 2033 and 2042. The Company has recorded a valuation allowance of $3.2 million related to the NOLs generated in states in which the Company may not have taxable income in the near future.

For the year ended December 31, 2021, the Company recorded a deferred tax asset of $3.0 million related to FTC carryovers from prior years with a corresponding full valuation allowance, as the Company determined the FTC carryover will expire prior to utilization.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 79 – ~~LOANS RECEIVABLE AND REVENUE~~EARNINGS PER SHARE

Unsecured and Secured Installment revenue includes interest income and non-sufficient-funds or returned-items fees on late or defaulted payments on past-due loans (to which we refer collectively in this report as “late fees”). Late fees comprise less than one-half of one percent of Installment revenues.

~~Open-End revenues include interest income on outstanding revolving balances and other usage or maintenance fees as permitted by underlying statutes.~~

~~Single-Pay revenues represent deferred presentment or other fees as defined by the underlying state, provincial or national regulations.~~

The following table ~~summarizes revenue by product:~~presents the computation of basic and diluted earnings per share (in thousands, except per share amounts):


	For the Year Ended December 31,
		2022		2021		2020
Net (loss) income from continuing operations		$	(185,484)	$	59,334	$	74,448
Net income from discontinued operations, net of tax		—		—		1,285
Net income		$	(185,484)	$	59,334	$	75,733

Weighted average common shares - basic		40,428		41,155		40,886
Dilutive effect of stock options and restricted stock units		—		1,988		1,205
Weighted average common shares - diluted		40,428		43,143		42,091

(Loss) earnings per share:
Continuing operations		$	(4.59)	$	1.44	$	1.82
Discontinued operations		—		—		0.03
Basic (loss) earnings per share		$	(4.59)	$	1.44	$	1.85

Diluted (loss) earnings per share:
Continuing Operations		$	(4.59)	$	1.38	$	1.77
Discontinued operations		—		—		0.03
Diluted (loss) earnings per share		$	(4.59)	$	1.38	$	1.80

Year Ended December 31,
(in thousands) 2017 2016 2015
Unsecured Installment $ 480,243
$ 330,713
$ 314,383
Secured Installment 100,981
81,453
86,325
Open-End 73,496
66,948
51,311
Single-Pay 268,794
313,276
321,597
Ancillary 40,119
36,206
39,515
Total revenue $ 963,633
$ 828,596
$ 813,131

Potential shares of common stock that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive; therefore, these shares are not included in calculating diluted earnings per share. For the year ended December 31, 2022, 2021 and 2020 there were 2.8 million, 0.2 million and 0.8 million of potential shares of common stock excluded from the calculation of diluted earnings per share because their effect was anti-dilutive.

The ~~following tables summarize Loans receivable~~Company utilizes the "control number" concept in the computation of diluted earnings per share to determine whether potential common stock instruments are dilutive. The control number used is income. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share is applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.

NOTE 10 – SHARE BASED COMPENSATION

The 2010 Equity Incentive Plan provided for the issuance of up to 2.16 million shares, subject to certain adjustment provisions, in the form of stock options, restricted stock and stock grants. In connection with approval of the 2017 Incentive Plan, no new awards were granted under the 2010 Equity Incentive Plan.

The Company's 2017 Incentive Plan provides for the issuance of up to 9.0 million shares, subject to certain adjustments, which may be issued in the form of stock options, restricted stock awards, RSUs, stock appreciation rights, performance awards or other awards. Grants issued to date under the plan may be settled in or based on common stock. Awards may be granted to officers, employees, consultants and directors. The 2017 Incentive Plan provides that shares of common stock subject to awards granted become available for re-issuance if such awards expire, or are canceled, forfeited, settled in cash or otherwise terminated.

See Note 1, "Summary of Significant Accounting Policies and Nature of Operations" for additional information on share-based compensation.

Stock Options

Stock options are awards which allow the grantee to purchase shares of common stock at prices equal to the fair value at the date of grant. Stock options typically vest at a rate of 20% per year over a 5-year period, have a term of 10 years and are subject to limitations on transferability. The Company did not grant stock option awards under the 2017 Incentive Plan in 2022, 2021 or 2020.

At the time of grant, the Company uses the Black-Scholes option pricing model to determine the fair value of stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by ~~product and the related delinquent loans receivable at December 31, 2017:~~individuals who receive

December 31, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Total
Current loans receivable $ 99,400
$ 151,343
$ 73,165
$ 47,949
$ 371,857
Delinquent loans receivable —
44,963
16,017
—
60,980
Total loans receivable 99,400
196,306
89,182
47,949
432,837
Less: allowance for losses (5,916 ) (43,754 ) (13,472 ) (6,426 ) (69,568 )
Loans receivable, net $ 93,484
$ 152,552
$ 75,710
$ 41,523
$ 363,269

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable

0-30 days past due $ 18,358
$ 8,116
$ 26,474
31-60 days past due 12,836
3,628
16,464
61-90 days past due 13,769
4,273
18,042
Total delinquent loans receivable $ 44,963
$ 16,017
$ 60,980

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

equity awards, and subsequent events are not indicative of the reasonableness of the Company's original estimates of fair value. The Company has estimated the expected term of stock options using a formula considering the weighted average vesting term and the original contract term. The expected volatility is estimated based upon the historical volatility of publicly traded stocks from the Company's industry sector (the alternative financial services sector). The expected risk-free interest rate is based on an average of various U.S. Treasury rates based on the expected term of the awards.

The following ~~tables summarize Loans receivable by product at~~table summarizes the Company's stock option activity for the years ended December 31, ~~2016:~~2022, 2021 and 2020:


	Stock Options	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)




Outstanding at Outstanding at January 1, 2020	1,404,622	$	3.56			2.6	$	12.1
Granted	—	$	—	$	—
Exercised	(274,510)	$	2.79				$	3.2
Forfeited	—	$	—	$	—
Outstanding at December 31, 2020	1,130,112	$	3.74			2.6	$	12.0
Granted	—	$	—	$	—
Exercised	(615,024)	$	2.83				$	8.1
Forfeited	—	$	—	$	—
Outstanding at December 31, 2021	515,088	$	4.83			4.2	$	5.8
Granted	—	$	—	$	—
Exercised	—	$	—				$	—
Forfeited	—	$	—	$	—
Outstanding at December 31, 2022	515,088	$	4.83			3.2	$	(0.7)

Options exercisable at December 31, 2022	515,088	$	4.83			3.2	$	(0.7)

December 31, 2016
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Total
Current loans receivable $ 90,487
$ 102,090
$ 63,157
$ 30,462
$ 286,196
Delinquent loans receivable —
—
—
—
—
Total loans receivable 90,487
102,090
63,157
30,462
286,196
Less: allowance for losses (5,501 ) (17,775 ) (10,737 ) (5,179 ) (39,192 )
Loans receivable, net $ 84,986
$ 84,315
$ 52,420
$ 25,283
$ 247,004

RSUs

~~Prior to January 1, 2017, we deemed all loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. See~~ ~~Note 1~~ - "Summary of Significant Accounting Policies and Nature of Operations" for a discussion of the Q1 Loss Recognition Change. This change in estimate resulted in approximately $61.0 million of Installment Loans at December 31, 2017 that remained on our balance sheet that were between 1 and 90 days delinquent, as compared to none in the prior year period. Additionally, the installment allowance for loan losses as

As of December 31, ~~2017~~2022, the Company has granted three types of ~~$69.6 million includes an estimated allowance~~RSUs: time-based, market-based and performance-based.

Grants of ~~$38.7 million~~time-based RSUs are valued at the date of grant based on the closing market price of the Company's common stock and are expensed using the straight-line method over the service period. Time-based RSUs typically vest over a three-year or four-year period.

Grants of market-based RSUs are valued using the Monte Carlo simulation pricing model. The market-based RSUs granted to date vest after three years if the Company's total stockholder return over the three-year performance period meets a specified target relative to other companies in its selected peer group. Expense recognition for the ~~Installment Loans between 1 and 90 days delinquent, as compared to none in~~market-based RSUs occurs over the ~~prior year period.~~service period using the straight-line method.

The Company granted performance-based RSUs to certain Flexiti employees following ~~tables summarize loans guaranteed by us under our CSO programs~~the closing of the acquisition. Grants of performance-based RSUs are valued at the grant date based on the closing market price of the Company's common stock. The performance-based RSUs vest over two years ending in March 2023 if Flexiti achieves specified internal targets, including revenue less NCOs and loan originations metrics. Expense recognition for performance-based RSUs occurs ratably over the ~~related delinquent receivables at December 31, 2017:~~service period if it is probable that the targets will be achieved as of each period end. If such results are not probable, no share-based compensation expense is recognized and any previously recognized share-based compensation expense is reversed.

Unvested shares of RSUs generally are forfeited upon termination of employment, or failure to achieve the required performance condition, if applicable.

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Current loans receivable guaranteed by the Company $ 62,676
$ 3,098
$ 65,774
Delinquent loans receivable guaranteed by the Company 12,480
537
13,017
Total loans receivable guaranteed by the Company 75,156
3,635
78,791
Less: CSO guarantee liability (17,073 ) (722 ) (17,795 )
Loans receivable guaranteed by the Company, net $ 58,083
$ 2,913
$ 60,996

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable
0-30 days past due $ 10,477
$ 459
$ 10,936
31-60 days past due 1,364
41
1,405
61-90 days past due 639
37
676
Total delinquent loans receivable $ 12,480
$ 537
$ 13,017

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

A summary of the activity of time-based, market-based and performance-based unvested RSUs for the years ended December 31, 2022, 2021 and 2020 are presented in the following table:


	Number of RSUs			Weighted Average Grant Date Fair Value per Share
	Time-Based	Market-Based	Performance-Based




January 1, 2020	1,061,753	394,861	—	$	11.47
Granted	694,213	368,539	—	$	10.40
Vested	(716,268)	—	—	$	12.86
Forfeited	(26,906)	(4,687)	—	$	11.89
December 31, 2020	1,012,792	758,713	—	$	10.26
Granted	1,238,564	299,053	253,310	$	15.51
Vested	(494,790)	—	—	$	11.04
Forfeited	(80,638)	(51,032)	—	$	11.46
December 31, 2021	1,675,928	1,006,734	253,310	$	13.27
Granted	1,649,980	1,422,886	—	$	9.75
Vested	(785,751)	—	(7,568)	$	13.80
Forfeited	(444,088)	(701,258)	(101,252)	$	11.90
December 31, 2022	2,096,069	1,728,362	144,490	$	10.87

Share-based compensation expense, which includes compensation costs from stock options and RSUs, included in the Consolidated Statements of Operations as a component of "Salaries and benefits" is summarized in the following table (in thousands):


	For the year ended,
	2022		2021		2020
Pre-tax share-based compensation expense	$	13,957	$	13,976	$	12,910
Income tax benefit	(3,283)		(4,475)		(1,164)
Total share-based compensation expense, net of tax	$	10,674	$	9,501	$	11,746

As of December 31, 2022, there was $22.2 million of unrecognized compensation cost related to RSUs. Total unrecognized compensation costs will be recognized over a weighted-average period of 1.9 years. There was no unrecognized compensation cost related to stock options.

NOTE 11 – LEASES

Leases entered into by the Company are primarily for retail stores in certain U.S. states and Canadian provinces.

Leases classified as finance leases were immaterial to the Company as of December 31, 2022. Operating leases expire at various times through 2033. Operating leases are included in "Right of use asset - operating leases" and "Lease liability - operating leases" in the Consolidated Balance Sheets. Operating lease costs are included in "Occupancy" in the Consolidated Statement of Operations. The majority of leases have an original term up to five years plus renewal options under similar terms.

The following table summarizes ~~loans guaranteed by us under our CSO programs at December 31, 2016:~~

December 31, 2016
(in thousands) Single-Pay Unsecured Installment Secured Installment Total
Current loans receivable guaranteed by the Company $ 1,092
$ 62,360
$ 4,581
$ 68,033
Delinquent loans receivable guaranteed by the Company —
—
—
—
Total loans receivable guaranteed by the Company 1,092
62,360
4,581
68,033
Less: CSO guarantee liability (274 ) (15,630 ) (1,148 ) (17,052 )
Loans receivable guaranteed by the Company, net $ 818
$ 46,730
$ 3,433
$ 50,981

~~The following table summarizes activity in~~ the ~~allowance~~operating lease costs and other information for ~~loan losses during~~ the ~~year~~years ended December 31, ~~2017:~~2022, 2021

and 2020 (in thousands):

Year Ended December 31, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 5,501
$ 17,775
$ 10,737
$ 5,179
$ —
$ 39,192
Charge-offs (190,623 ) (88,694 ) (30,005 ) (39,752 ) (5,254 ) (354,328 )
Recoveries 127,184
18,002
9,517
18,743
3,291
176,737
Net charge-offs (63,439 ) (70,692 ) (20,488 ) (21,009 ) (1,963 ) (177,591 )
Provision for losses 63,760
96,150
23,223
22,245
1,963
207,341
Effect of foreign currency translation 93
522
—
11
—
626
Balance, end of period $ 5,915
$ 43,755
$ 13,472
$ 6,426
$ —
$ 69,568
Allowance for loan losses as a percentage of gross loan receivables 6.0 % 22.3 % 15.1 % 13.4 % N/A
16.1 %

~~The following table summarizes activity in the CSO guarantee liability during the year ended December 31, 2017:~~

Year Ended December 31, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Total
Balance, beginning of period $ 274
$ 15,630
$ 1,148
$ 17,052
Charge-offs (2,121 ) (141,429 ) (10,551 ) (154,101 )
Recoveries 1,335
30,230
4,394
35,959
Net charge-offs (786 ) (111,199 ) (6,157 ) (118,142 )
Provision for losses 512
112,642
5,731
118,885
Balance, end of period $ —
$ 17,073
$ 722
$ 17,795

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)


	Year Ended December 31,
	2022			2021			2020
Operating lease costs:
Third-Party	$	32,538		$	31,197		$	30,828
Related-Party	2,282			3,394			3,386
Total operating lease costs (1)	$	34,820		$	34,591		$	34,214

Cash paid for amounts included in the measurement of operating lease liabilities	$	28,414		$	36,235		$	34,651
ROU assets (divested) obtained	$	(24,749)		$	9,682		$	18,847
Weighted average remaining lease term - Operating leases	4.4 years			4.9 years			5.7 years
Weighted average discount rate - Operating leases	7.8		%	8.3		%	9.9		%
(1) Includes immaterial variable lease costs.

The following table summarizes ~~activity in~~ the ~~allowance for loan losses and~~aggregate operating lease payments that the ~~CSO guarantee liability, in total, during the year ended~~Company is contractually obligated to make

under operating leases as of December 31, ~~2017:~~2022 (in thousands):


	Third-Party		Related-Party		Total
2023	$	24,323	$	616	$	24,939
2024	17,433		632		18,065
2025	11,813		649		12,462
2026	6,686		667		7,353
2027	4,265		685		4,950
Thereafter	8,139		993		9,132
Total	72,659		4,242		76,901
Less: Imputed interest	(12,878)		(1,176)		(14,054)
Operating lease liabilities	$	59,781	$	3,066	$	62,847

There were no material leases entered into subsequent to the balance sheet date.

Year Ended December 31, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 5,775
$ 33,405
$ 11,885
$ 5,179
$ —
$ 56,244
Charge-offs (192,744 ) (230,123 ) (40,556 ) (39,752 ) (5,254 ) (508,429 )
Recoveries 128,519
48,232
13,911
18,743
3,291
212,696
Net charge-offs (64,225 ) (181,891 ) (26,645 ) (21,009 ) (1,963 ) (295,733 )
Provision for losses 64,272
208,792
28,954
22,245
1,963
326,226
Effect of foreign currency translation 93
522
—
11
—
626
Balance, end of period $ 5,915
$ 60,828
$ 14,194
$ 6,426
$ —
$ 87,363

~~The following table summarizes activity in the allowance for loan losses during the year ended December 31, 2016:~~

Year Ended December 31, 2016
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 8,313
$ 10,603
$ 9,209
$ 4,823
$ —
$ 32,948
Charge-offs (225,066 ) (165,843 ) (145,160 ) (86,586 ) (5,786 ) (628,441 )
Recoveries 157,398
120,446
128,886
62,859
3,671
473,260
Net charge-offs (67,668 ) (45,397 ) (16,274 ) (23,727 ) (2,115 ) (155,181 )
Provision for losses 64,919
52,776
17,802
24,083
2,115
161,695
Effect of foreign currency translation (63 ) (207 ) —
—
—
(270 )
Balance, end of period $ 5,501
$ 17,775
$ 10,737
$ 5,179
$ —
$ 39,192
Allowance for loan losses as a percentage of gross loan receivables 6.1 % 17.4 % 17.0 % 17.0 % N/A 13.7 %

~~The following table summarizes activity in the CSO guarantee liability during the year ended December 31, 2016:~~

Year Ended December 31, 2016
(in thousands) Single-Pay Unsecured Installment Secured Installment Total
Balance, beginning of period $ 334
$ 15,910
$ 1,507
$ 17,751
Charge-offs (17,379 ) (164,853 ) (16,930 ) (199,162 )
Recoveries 4,807
83,112
13,950
101,869
Net charge-offs (12,572 ) (81,741 ) (2,980 ) (97,293 )
Provision for losses 12,512
81,461
2,621
96,594
Balance, end of period $ 274
$ 15,630
$ 1,148
$ 17,052

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 12 – DIVIDENDS

Dividend Program

In February 2020, the Company initiated a dividend program which provided a quarterly dividend of $0.055 per share ($0.22 per share annualized). In May 2021, the Company increased its quarterly dividend to $0.11 per share.

The ~~following~~ table below summarizes ~~activity in~~ the ~~allowance~~Company's quarterly dividends for ~~loan losses and~~ the ~~CSO guarantee liability, in total, during the year~~years ended December 31, ~~2016:~~2022 and 2021.


						Dividends Paid
	Date of declaration	Stockholders of record	Date paid	Dividend per share		(in thousands)
Q1 2022	February 4, 2022	February 18, 2022	March 1, 2022	$	0.11	$	4,517
Q2 2022	April 28, 2022	May 10, 2022	May 23, 2022	$	0.11	$	4,440
Q3 2022	August 3, 2022	August 15, 2022	August 26, 2022	$	0.11	$	4,453


						Dividends Paid
	Date of declaration	Stockholders of record	Date paid	Dividend per share		(in thousands)
Q1 2021	January 29, 2021	February 16, 2021	March 2, 2021	$	0.055	$	2,284
Q2 2021	May 3, 2021	May 14, 2021	May 27, 2021	$	0.11	$	4,580
Q3 2021	July 28, 2021	August 9, 2021	August 19, 2021	$	0.11	$	4,556
Q4 2021	October 27, 2021	November 12, 2021	November 22, 2021	$	0.11	$	4,453

In October 2022, the Company's Board of Directors suspended the quarterly dividend.

Year Ended December 31, 2016
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 8,647
$ 26,513
$ 10,716
$ 4,823
$ —
$ 50,699
Charge-offs (242,445 ) (330,696 ) (162,090 ) (86,586 ) (5,786 ) (827,603 )
Recoveries 162,205
203,558
142,836
62,859
3,671
575,129
Net charge-offs (80,240 ) (127,138 ) (19,254 ) (23,727 ) (2,115 ) (252,474 )
Provision for losses 77,431
134,237
20,423
24,083
2,115
258,289
Effect of foreign currency translation (63 ) (207 ) —
—
—
(270 )
Balance, end of period $ 5,775
$ 33,405
$ 11,885
$ 5,179
$ —
$ 56,244

~~NOTE 8 – CREDIT SERVICES ORGANIZATION~~

The CSO fee receivable amounts under our CSO programs were $14.5 million and $9.2 million at December 31, 2017 and December 31, 2016, respectively. As noted, we bear the risk of loss through our guarantee to purchase any defaulted customer loans from the lenders. The terms of these loans range from six to eighteen months. This guarantee represents an obligation to purchase specific loans that go into default. (See Note 1 - "Significant Accounting Policies and Nature of Operations" for a description of our accounting policies). As of December 31, 2017 and December 31, 2016, the maximum amount payable under all such guarantees was $65.2 million and $59.6 million, respectively. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover some or the entire amount from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured at origination when it is probably and estimable as to what likely collections are to be received over the expected life of the guarantee. The guarantee estimated by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $17.8 million and $17.1 million at December 31, 2017 and December 31, 2016, respectively.

We have placed $17.9 million and $18.7 million in collateral accounts for the lenders at December 31, 2017 and December 31, 2016, respectively, which is reflected in Prepaid expenses and other in the Consolidated Balance Sheets. The balances required to be maintained in these collateral accounts vary based upon lender, but are typically based on a percentage of the outstanding loan balances held by the lender. The percentage of outstanding loan balances required for collateral is defined within the terms agreed to between us and each such lender.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

NOTE 913 – ~~ACCOUNTS PAYABLE AND ACCRUED LIABILITIES~~SEGMENT REPORTING

~~Components~~Segment information is prepared on the same basis that the Company's CODM reviews financial information for operational decision making purposes, including revenues, net revenue, gross margin, segment operating income and other items.

As of ~~Accounts payable and accrued liabilities were are follows:~~December 31, 2022, the Company has renamed the "U.S." reportable segment to the "U.S. Direct Lending" reportable segment.

December 31, December 31,
(dollars in thousands) 2017 2016
Trade accounts payable $ 22,483
$ 18,588
Money orders payable 8,131
7,356
Accrued taxes, other than income taxes 678
447
Accrued payroll and fringe benefits 18,890
14,621
Reserve for store closure costs 4,419
1,258
Other accrued liabilities 1,191
393
Total $ 55,792
$ 42,663

~~NOTE 10 – RESTRUCTURING COSTS~~

InU.S. Direct Lending. As of December 31, 2022, the ~~third quarter of 2017, the Boards of Directors of us and our U.K. subsidiaries approved a plan to close the remaining 13 Speedy Cash branch~~Company operated over 490 U.S. retail locations in 13 states. The Company provides secured and unsecured installment loan products to near-prime and non-prime consumers as well as credit insurance and other ancillary financial products.

Canada Direct Lending. As of December 31, 2022, the ~~United Kingdom.~~Company operated nearly 150 stores across eight Canadian provinces and had an online presence in eight provinces and one territory. The ~~affected branches closed during~~Company provides Revolving LOC and Installment loans, which include Single-Pay loans, optional credit protection insurance products to Revolving LOC and Installment loan customers, check cashing, money transfer services, foreign currency exchange, reloadable prepaid debit cards and a number of other ancillary financial products and services.

Canada POS Lending. As of December 31, 2022, the ~~third quarter~~Company served Canadian customers through POS financing available at over 8,400 retail locations and ~~our~~over 3,500 merchant partners across 10 provinces and two territories. The Company provides Revolving LOC loans and a number of other ancillary financial ~~results include $7.4 million~~products. Results of ~~related charges primarily for the remaining net cash obligations for store leases and related costs ($5.9 million) and the write-off of fixed assets and leasehold improvements ($1.5 million).~~

During 2016, we eliminated certain corporate positions in our Canadian headquarters and closed six stores in Texas. These were all underperforming stores that were acquired as part of the Money Box acquisition. Our resultsoperations for the year ended December 31, ~~2016 included charges related to these store closures primarily consisting~~2021 for Canada POS Lending represent results from the date of ~~certain lease obligations and the write-down and loss on the disposal of fixed assets. We also determined that we will be unable to reopen one store in Missouri that was damaged by a fire.~~

~~In December 2015, we closed~~Flexiti's acquisition, March 10, branch locations in the U.K., incurring store closure costs of $4.3 million (£2.9 million) as part of an overall plan to reduce operating losses in the wake of ongoing regulatory and market changes in the U.K.

~~Impairments, store closure costs and severance costs for the years ended~~2021, through December 31, ~~2017, 2016 and 2015 were as follows:~~2021.

Year Ended December 31,
(dollars in thousands) 2017 2016 2015
Lease obligations and related costs $ 5,883
1,620
1,711
Write-down and loss on disposal of fixed assets 1,510
772
2,253
Severance costs —
1,226
327
Total restructuring costs $ 7,393
$ 3,618
$ 4,291

~~Activity for the restructuring reserve for the years ended December 31, 2017 and 2016 was as follows:~~

Year Ended December 31,
(dollars in thousands) 2017 2016
Beginning balance - January 1 $ 1,258
$ 1,972
Additions and adjustments 7,393
3,618
Payments and write-downs (4,232 ) (4,332 )
Ending balance - December 31 $ 4,419
$ 1,258

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The following table illustrates summarized financial information concerning reportable segments (in thousands):

~~Closed store reserves~~


	For the Year Ended December 31,
		2022		2021		2020
Revenues by segment: (1)
U.S. Direct Lending		$	615,722	$	525,962	$	638,524
Canada Direct Lending		303,750		257,039		208,872
Canada POS Lending		106,446		34,842		—
Consolidated revenue		$	1,025,918	$	817,843	$	847,396
Net revenues by segment:
U.S. Direct Lending		$	375,144	$	359,929	$	408,360
Canada Direct Lending		189,183		202,042		150,225
Canada POS Lending		61,266		10,204		—
Consolidated net revenue		$	625,593	$	572,175	$	558,585
Segment (loss) income before income taxes:
U.S. Direct Lending		$	(175,350)	$	47,517	$	34,172
Canada Direct Lending		51,163		88,731		46,171
Canada POS Lending		(69,975)		(55,691)		—
Consolidated (loss) income before income taxes		$	(194,162)	$	80,557	$	80,343
Expenditures for long-lived assets by segment:
U.S. Direct Lending		$	18,173	$	13,450	$	10,079
Canada Direct Lending		6,768		2,238		639
Canada POS Lending		20,880		7,891		—
Consolidated expenditures for long-lived assets		$	45,821	$	23,579	$	10,718
(1) For revenue by product, see Note 2 , "Loans Receivable and Revenue."

The following table provides the proportion of gross loans receivable by segment (in thousands):


	December 31, 2022		December 31, 2021
U.S. Direct Lending	$	773,380	$	661,945
Canada Direct Lending	481,015		427,197
Canada POS Lending	833,438		459,176
Total gross loans receivable	$	2,087,833	$	1,548,318

The following table represents the Company's net long-lived assets, comprised of property and equipment, by segment. These amounts are ~~included in~~aggregated on a legal entity basis and do not necessarily reflect where the ~~“Accounts payable and accrued liabilities” line item on the accompanying Consolidated Balance Sheets.~~asset is physically located (in thousands):


	December 31, 2022		December 31, 2021
U.S. Direct Lending	$	13,993	$	32,753
Canada Direct Lending	15,239		21,072
Canada POS Lending	2,725		810
Total net long-lived assets	$	31,957	$	54,635

~~NOTE 11 – LONG-TERM DEBT~~The Company's CODM does not review assets by segment for purposes of allocating resources or decision-making purposes; therefore, total assets by segment are not disclosed.

~~Long-term debt consisted of the following:~~

December 31, December 31,
(in thousands) 2017 2016
12.00% Senior Secured Notes (due 2022) $ 585,823
$ —
May 2011 Senior Secured Notes (due 2018) —
223,164
May 2012 Senior Secured Notes (due 2018) —
89,734
February 2013 Senior Secured Notes (due 2018) —
101,184
February 2013 Cash Pay Notes (due 2017) —
124,365
Non-Recourse U.S. SPV Facility 120,402
63,054
ABL Facility —
23,406
Senior Revolver —
—
Total long-term debt, including current portion 706,225
624,907
Less: current maturities of long-term debt —
147,771
Long-term debt $ 706,225
$ 477,136

~~12.00% Senior Secured Notes~~

On February 15, 2017 CFTC issued $470.0 million of 12.00% Senior Secured Notes due March 1, 2022. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the Notes were used, together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly-owned subsidiary, CURO Intermediate Holdings Corp. ("CURO Intermediate"), (ii) redeem the outstanding 12.00% Senior Cash Pay Notes due 2017, and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. Consequently, we received a $130.1 million dividend from CFTC in February 2017 to fund the redemption of the 12.00% Senior Cash Pay Notes. The extinguishment of the 10.75% Senior Secured Notes and the 12.00% Senior Cash Pay Notes resulted in a pretax loss of $12.5 million in the year ended December 31, 2017.

In connection with the February 2017 debt issuance we capitalized financing costs of approximately $14.0 million, the balance of which is included in the Consolidated Balance Sheets as a component of “Long-term debt,” and is being amortized over the term of the Senior Secured Notes and included as a component of interest expense.

~~On November 2, 2017, CFTC issued $135.0 million aggregate principal amount of additional 12.00% Senior~~

Secured Notes in a private offering exempt from the registration requirements of the Securities Act, or the Additional Notes Offering. The proceeds from the Additional Notes Offering were used, together with available cash, to (i) pay a cash dividend, in an amount of $140.0 million to us, CFTC’s sole stockholder, and ultimately our stockholders and (ii) pay fees, expenses, premiums and accrued interest in connection with the Additional Notes Offering. CFTC received the consent of the holders holding a majority in the outstanding principal amount outstanding of the current 12.00% Senior Secured Notes to a one-time waiver with respect to the restrictions contained in Section 5.07(a) of the indenture governing the 12.00% Senior Secured Notes to permit the dividend.

In connection with the November 2017 debt issuance we capitalized financing costs of approximately $4.3 million, the balance of which is included in the Consolidated Balance Sheets as a component of “Long-term debt,” and is being amortized over the term of the Senior Secured Notes and included as a component of interest expense.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 14 – ACQUISITIONS AND DIVESTITURE

ACQUISITIONS

First Heritage

On July 13, 2022, we completed the acquisition of First Heritage, a consumer lender that provides near-prime installment loans along with customary opt-in insurance and other financial products, for a purchase price of $140.0 million in cash, subject to certain customary working capital and other adjustments. The ~~Senior Secured Notes contain normal~~Company began consolidating the financial results of First Heritage in the Consolidated Financial Statements on July 13, 2022 within the U.S. Direct Lending operating segment.

This transaction has been accounted for using the acquisition method of accounting, which requires that assets acquired and ~~customary affirmative and negative covenants. Certain~~liabilities assumed be recognized at their fair values as of the ~~more significant covenants~~acquisition date. The Company was the acquirer for purposes of accounting for the business combination. The values assigned to the acquired assets and liabilities assumed are ~~(a) limitations~~provisional based on ~~our ability~~the preliminary fair value estimates as of the acquisition date. The values assigned to ~~pay dividends, (b) limitations~~the assets acquired and liabilities assumed are based on ~~asset sales~~preliminary estimates of fair value available as of the date of this Form 10-K and ~~(c) limitations on our ability~~may be adjusted during the measurement period of up to ~~incur additional indebtedness. The Senior Secured Notes also contain various events~~12 months from the date of ~~default,~~acquisition as further information becomes available. Any changes in the ~~occurrence~~fair values of ~~which could~~the assets acquired and liabilities assumed during the measurement period may result in ~~the acceleration of all obligations under the Senior Secured Notes.~~adjustments to goodwill. As of December 31, ~~2017, we were~~2022, the areas that remain primarily relate to the valuation of certain loans receivables, intangible assets and certain tax-related balances.

The following table presents the preliminary purchase price allocation recorded in ~~full compliance with~~ the ~~covenants and other provisions~~Company’s Consolidated Balance Sheet as of the ~~Senior Secured Notes.~~date of acquisition (in thousands):

~~On March 7, 2018, we used a portion~~


	Amounts acquired on July 13, 2022
Assets
Cash and cash equivalents	$	31,396
Restricted cash	1,933
Gross loans receivable(1)	218,011
Prepaid expenses and other	1,285
Property and equipment	345
Right-of-use assets	4,241
Intangibles, net	10,670
Total assets	$	267,880

Liabilities
Accounts payable and accrued liabilities	$	4,270
Lease liabilities	4,241
Debt	170,392
Total liabilities	178,904

Net assets acquired	88,976
Total consideration paid	164,341
Goodwill	$	75,365
(1) The gross contractual loans receivables as of July 13, 2022 were $236.1 million, of which the Company estimates $18.1 million will not be collected.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the ~~net proceeds from the IPO to redeem $77.5 million~~date of the 12.00% Senior Secured Notes due 2022 and to pay related fees, expenses, premiums and accrued interest. See Note 25 - Subsequent Events of this Annual Report on Form 10-K for additional information about this transaction.acquisition (dollars in thousands):

~~Non-Recourse U.S. SPV Facility~~


	Fair Value		Useful Life
Trade name	$	3,790	10.0 years
Customer relationships	6,880		3.5 years
Total identified intangible assets	$	10,670

On November 17, 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the “SPV Borrower”) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides for an $80.0 million term loan and $45.0 million of initial revolving borrowing capacity, with the ability to expand such revolving borrowing capacity over time and an automatic expansion to $70.0 million on the six month anniversary of the closing date, (our “Non-Recourse U.S. SPV Facility”). Our Non-Recourse U.S. SPV Facility is secured by a first lien against assets of the SPV Borrower, which is a special purpose vehicle holding certain receivables originated by the operating entities of Intermediate and CURO Receivables Holdings I, LLC, a Delaware limited liability company (“Holdings”) which is a holding company that owns the equity of the SPV Borrower. The lender advances to the SPV Borrower 80% of the principal balance of the eligible installment loans that we sell to the SPV Borrower, which serve as collateral for the lender. As customer loan payments come into the SPV Borrower, such payments are subjected to a conventional priority-of-payment waterfall provided the loan-to-value doesn’t exceed 80%. The loans will bear interest at an annual rate of up to 12.0% plus the greater of (x) 1.0% per annum and (y) the three-month LIBOR. The SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. Revolving commitment terminations and voluntary prepayments of term loans made prior to the 30th month anniversary of the closing date are subject to a fee equal to 3.0% of the amount of revolving loans commitments terminated or term loans voluntarily prepaid.

The Non-Recourse U.S. SPV Facility contains various conditions to borrowing and affirmative, negative and financial maintenance covenants. Certain of the more significant covenants are (a) minimum monthly annualized net yield and (b) maximum average monthly net loss. The Non-Recourse U.S. SPV Facility also contains various events of default, the occurrence of which could result in termination of the lenders’ commitments to lend and the acceleration of all our obligations under the Non-Recourse U.S. SPV Facility. As of December 31, 2017, we were in full compliance with the covenants and other provisions of the Non-Recourse U.S. SPV Facility. This facility matures in 2021.

~~Senior Revolver~~

On September 1, 2017, we entered into a $25.0 million Senior Secured Revolving Loan Facility (the “Senior Revolver”). The terms of the Senior Revolver generally conform to the related provisions in the Indenture dated February 15, 2017 for our 12.00% Senior Secured Notes due 2022 and complements our other financing sources, while providing seasonal short-term liquidity. Under the Senior Revolver, there is $25.0 million maximum availability, including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR plus 5.00% (subject to a 5% overall rate minimum) and is repayable on demand.

The terms of the Senior Revolver require that the outstanding balance be reduced to $0 for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries of CURO that guarantee our 12.00% Senior Secured Notes due 2022 and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing our 12.00% Senior Secured Notes due 2022. The revolver was undrawn at December 31, 2017.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Goodwill of $75.4 million represents the excess of the consideration paid over the fair value of the net tangible and intangible assets acquired. The goodwill was primarily attributable to expected synergies created with the Company’s future product offerings and the value of the combined workforce. Goodwill from this transaction is deductible for income tax purposes.

The ~~Senior Revolver contains various conditions~~Company incurred costs related to ~~borrowing and affirmative, negative and financial maintenance covenants. Certain~~this acquisition of $10.1 million that were recorded in "Other operating expense" in the U.S. Direct Lending operating segment in the accompanying Consolidated Statement of Operations for the year ended December 31, 2022.

Heights Finance

On December 27, 2021, the Company acquired 100% of the ~~more significant covenants are (a) minimum eligible collateral value, (b) consolidated interest coverage ratio~~outstanding stock of Heights Finance for $360.0 million, consisting of $335.0 million in cash and ~~(c) consolidated leverage ratio.~~ $25.0 million of our common stock. Heights Finance is a consumer finance company that provides secured and unsecured Installment loans to near-prime and non-prime consumers, and offers customary opt-in insurance and other financial products across 390 branches in 11 U.S. states.

The ~~Senior Revolver also contains various events~~Company began consolidating the financial results of ~~default,~~Heights Finance in the ~~occurrence of which could result in termination~~Consolidated Financial Statements on December 27, 2021 within the U.S. Direct Lending operating segment. For additional information, see Note 15, "Acquisitions" of the ~~lenders’ commitments to lend and the acceleration of all our obligations under the Senior Revolver.~~ 2021 Form 10-K.

As of December 31, ~~2017, we were in full compliance with~~2021, the ~~covenants~~Company completed the determination of the fair values of the acquired identifiable assets and ~~other provisions of our Senior Revolver.~~

~~In February 2018,~~liabilities. During the ~~Senior Revolver capacity was~~year ended December 31, 2022, the Company recorded measurement period adjustments that increased ~~to $29.0 million as permitted~~goodwill by ~~the Indenture~~$11.8 million. The measurement period adjustment related to the ~~Senior Secured Notes based upon consolidated tangible assets.~~fair value of the loan portfolio and would have resulted in $7.7 million of incremental interest and fee revenue during the three months ended March 31, 2022 and no impact on the 12 months ended December 31, 2022. The ~~Senior Revolver is now syndicated with participation by~~Company recorded a ~~second bank.~~

~~In connection with this facility we capitalized financing costs of approximately $0.1 million, the balance of which are included~~measurement period adjustment in the ~~Consolidated Balance Sheets~~fourth quarter of 2022 that decreased goodwill by $3.5 million related to the final true-up of deferred tax balances after the pre-acquisition income tax returns were filed in October 2022. The Company made these measurement period adjustments to reflect the correct deferred tax balances that existed as ~~a component of “Other assets,” and are being amortized over the term~~ of the ~~facility~~acquisition date and ~~included as~~not from events subsequent to such date. Additionally, in the fourth quarter of 2022, a ~~component of interest expense.~~

~~ABL Facility~~

~~On November 17, 2016, CURO Intermediate entered into a six-month recourse credit facility with Victory Park Management, LLC and certain other lenders~~measurement period adjustment was recorded related to tax filings for pre-acquisition activity which ~~provides for $25.0~~resulted in $4.2 million of ~~borrowing capacity, (our “ABL Facility”). Our ABL Facility is secured by a first lien against our assets~~income tax receivables and an increase to accounts payable for the assets of CURO Intermediate and its domestic subsidiaries. The lender advances to CURO Intermediate 80% of the principal balance of the eligible installment loans held by CURO Intermediate and its guarantor subsidiaries. As customer loan payments come into CURO Intermediate and its guarantor subsidiaries, such payments are subjected to a conventional priority-of-payment waterfall provided the loan-to-value doesn’t exceed 80%. The loans will bear interest at an annual rate of up to 8.0% plus the greater of (x) 1.0% per annum and (y) the three-month LIBOR. The ABL Facility provides that CURO Intermediate pays a 0.50% per annum commitment fee on the unused portion of the commitments and a 4.0% per annum monitoring fee on the loans outstanding. Commitment terminations and voluntary prepayments of loans made prior to the 30th month anniversary of the closing date of the Non-Recourse U.S. SPV Facility are subject to a fee equal to 3.0% of the amount of revolving loan commitments terminated or loans voluntarily prepaid. This facility matured in May 2017 and was fully converted to the Non-Recourse U.S. SPV Facility.

~~Cash Money Revolving Credit Facility~~

Cash Money Cheque Cashing, Inc., one of our Canadian subsidiaries, maintains a C$7.3 million revolving credit facility with Royal Bank of Canada. The Cash Money Revolving Credit Facility provides short-term liquidity required to meet the working capital needs of our Canadian operations. Aggregate draws under the revolving credit facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and (ii) C$7.3 million.same amount. As of December 31, ~~2017,~~2022, the ~~borrowing capacity under our revolving credit facility was reduced by C$0.3 million in stand-by-letters~~Company completed the determination of ~~credit.~~

~~The Cash Money Revolving Credit Facility is collateralized by substantially all~~the fair values of ~~Cash Money’s~~the acquired identifiable assets and ~~contains various covenants that include, among other things, that~~liabilities.

The following table presents the ~~aggregate borrowings outstanding under~~purchase price allocation recorded in the facility not exceed the borrowing base, restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Cash Money Revolving Credit Facility bear interest (per annum) at the prime rate of a Canadian chartered bank plus 1.95%.

~~The Cash Money Revolving Credit Facility was undrawn at December 31, 2017 and December 31, 2016.~~

~~Subordinated Shareholder Debt~~

~~As part~~Company’s Consolidated Balance Sheet as of the date of acquisition of ~~Cash Money in 2011, we issued an Escrow Note to the Seller which provided us indemnification for certain claims. This note bears interest at~~ ~~10.0%~~ ~~per annum, and quarterly interest payments~~Heights Finance (in thousands):

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)


	Amounts acquired on December 27, 2021		Measurement period adjustments		Amounts acquired on December 27, 2021 (as adjusted)
Assets
Cash and cash equivalents	$	13,564	$	—	$	13,564
Restricted cash	33,630		—		33,630
Gross loans receivable(1)	471,630		(15,379)		456,251
Income tax receivable	3,526		4,209		7,735
Prepaid expenses and other	7,410		—		7,410
Property and equipment	4,748		—		4,748
Right-of-use assets	16,111		—		16,111
Intangibles, net	11,900		—		11,900
Deferred tax asset	—		2,477		2,477
Other assets	98		—		98
Total assets	$	562,617	$	(8,693)	$	553,924

Liabilities
Accounts payable and accrued liabilities	$	19,186	$	4,209	$	23,395
Lease liabilities	16,315		—		16,315
Deferred tax liability	1,077		(1,077)		—
Accrued interest on debt	1,781		—		1,781
Debt	350,000		—		350,000
Total liabilities	$	388,359	$	3,132	$	391,491

Net assets acquired	$	174,258	$	(11,825)	$	162,433
Total consideration paid	428,115				428,115
Goodwill	$	253,857			$	265,682
(1) The gross contractual loans receivables as of December 27, 2021 were $485.4 million, of which the Company estimates $29.1 million will not be collected.

~~are due until~~

Flexiti

On March 10, 2021, the ~~note matures in May 2019. The balance of this note at December 31, 2017 and December 31, 2016 was $2.4 million and $2.2 million, respectively.~~

~~10.75% Senior Secured Notes~~

In May 2011, CURO Intermediate issued and sold $250.0 million of 10.75% Senior Secured Notes due May 2018. In connection with this borrowing, we incurred $9.6 million of financing costs that were included as a direct reduction of Long-term debt and amortized over the term of the notes as a component of interest expense. In September 2016, CURO Intermediate made an open-market purchase of $25.1 millionCompany acquired 100% of the outstanding ~~May 2011 10.75% Senior Secured Notes at 71.25%~~stock of ~~the principal plus accrued and unpaid interest~~Flexiti. The fair value of ~~$1.0~~total consideration paid was $86.5 million ~~and recognized a gain on extinguishment of $7.0~~in cash, $6.3 million ~~related to the discount on repurchase, net of unamortized deferred financing~~in debt costs and ~~fees.~~$20.6 million in contingent cash consideration subject to future operating metrics, including revenue less NCOs and loan originations. Flexiti provides POS financing solution to retailers across Canada and provides the Company capability and scale opportunity in Canada’s credit card and POS financing markets.

~~In May 2012, CURO Intermediate issued and sold $90.0 million~~The Company began consolidating the financial results of 10.75% Senior Secured Notes under the same indenture. These notes were issued at 101.75% of their face value for total proceeds of $91.6 million, with an effective interest rate of 10.35%. The original issue premium of $1.6 million was included as a component of Long-term debt and amortized over the term of the notes as a component of interest expense. In connection with this debt offering and an increase to our U.S. Revolving Credit Facility in 2012, we incurred $3.5 million of financing costs, the balance of which are includedFlexiti in the Consolidated ~~Balance Sheets~~Financial Statements on March 10, 2021. Flexiti generated $34.8 million of revenue and incurred $50.9 million of operating expenses during the period March 10 through December 31, 2021.

This transaction was accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as ~~a direct reduction of Long-term debt. The deferred financing costs were being amortized over the term~~ of the ~~notes and included as a component~~acquisition date. The Company was the acquirer for purposes of ~~interest expense.~~

~~In February 2013, CURO Intermediate issued and sold $100.0 million of 10.75% Senior Secured Notes under~~accounting for the ~~same indenture. These notes were issued at 106.25% of their face value for total proceeds of $106.2 million, with an effective interest rate of 9.24%.~~business combination. The original issue premium of $6.2 million was included as a component of Long-term debt and amortized over the term of the notes as a component of interest expense. In connection with this debt offering and an increase to our U.S. Revolving Credit Facility in 2012, we incurred $2.9 million of financing costs, the balance of which were included in the Consolidated Balance Sheets as a direct reduction of Long-term debt. The deferred financing costs were being amortized over the term of the notes and included as a component of interest expense.

Interest was paid semi-annually on each of the issuances of 10.75% Senior Secured Notes on May 15 and November 15 of each applicable year. As discussed above, proceeds from the February 2017 12.00% Senior Secured Notes were used, together with available cash, to redeem the outstanding 10.75% Senior Secured Notes due 2018.

~~12.00% Senior Cash Pay Notes~~

In February 2013, Speedy Group issued $125.0 million 12.00% Senior Cash Pay Notes due November 15, 2017. In connection with this borrowing, we incurred $3.4 million of financing costs that were recorded as a direct reduction of Long-term debt and amortized over the term of the notes as a component of interest expense. As discussed above, these notes were redeemed in February 2017 using proceeds from the February 2017 12.00% Senior Secured Notes, together with available cash.

~~Ranking and Guarantees~~

The 12.00% Senior Secured Notes due 2022 rank senior in right of payment to all of our and our guarantor entities’ existing and future subordinated indebtedness and equal in right of payment with all our and our guarantor entities’ existing and our future senior indebtedness, including borrowings under our revolving credit facilities. Pursuant to our Inter-creditor Agreement, the Notes and the guarantees will be effectively subordinated to our credit facilities and certain other indebtednessvalues assigned to the ~~extent~~assets acquired and liabilities assumed were based on their estimates of ~~the~~fair value ~~of the assets securing such indebtedness and to liabilities of our subsidiaries that are not guarantors.~~available.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The ~~Notes are secured by liens on substantially all of our and~~following table presents the guarantors’ assets, subject to certain exceptions. On or after March 1, 2019, we may redeem some or all of the Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any to the applicable date of redemption. Prior to March 1, 2019, we will be able to redeem up to 40% of the Notes at a redemptionpurchase price of 112.000% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date with the net cash proceeds of certain equity offerings. Prior to March 1, 2019, subject to certain terms and conditions, we will also be able to redeem the Notes at a redemption price of 100% of the principal amount of the Notes redeemed, plus the applicable premium and any accrued and unpaid interest to the redemption date.

~~Future Maturities of Long-Term Debt~~

~~Annual maturities of outstanding long-term debt (before deferred financing costs and premiums) for each of the five years after December 31, 2017 are as follows:~~

(in thousands) Amount
2018 $ —
2019 —
2020 —
2021 124,590
2022 605,000
$ 729,590

~~NOTE 12 – SHARE-BASED COMPENSATION~~

The 2010 Equity Incentive Plan (the “Plan”) was originally approved by our shareholders in November 2010, and amended in December 2013. The Plan provides for the issuance of up to 2,160,000 shares, subject to certain adjustment provisions describedallocation recorded in the ~~Plan. The Plan provides for the granting~~Company’s Consolidated Balance Sheet as of stock options, restricted stock, and stock grants. Awards may be granted to employees, consultants and our directors. The Plan provides that shares of Class B common stock subject to awards granted become available for issuance if such awards expire, terminate, are canceled for any reason, or are forfeited by the recipient. Pursuant to the formation of CURO, all of the rights and obligations under the stock option agreements were transferred from CFTC. Thus, the outstanding and unexercised options now represent an option to purchase the same number of shares of common stock of CURO at the same exercise price and on the same terms and conditions as provided in the original option agreement. In conjunction with approval of the 2017 Incentive Plan, no new awards will be granted under the plan.

The 2017 Incentive Plan was approved by our shareholders on November 8, 2017. The 2017 Incentive Plan provides for the issuance of up to 5,000,000 shares, subject to certain adjustment provisions described in the 2017 Incentive Plan, for the granting of stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards and other awards that may be settled in or based upon our common stock. Awards may be granted to certain officers, employees, consultants and directors of the Company. The 2017 Incentive Plan provides that shares of common stock subject to awards granted become available for issuance if such awards expire, terminate, are canceled for any reason, or are forfeited by the recipient.

~~Stock options are awards which allow the grantee to purchase shares of our common stock at prices equal to the fair value at~~ the date of ~~grant.~~acquisition (in thousands):


	Amounts acquired on March 10, 2021		Measurement period adjustments		Amounts acquired on March 10, 2021 (as adjusted)
Assets
Cash and cash equivalents	$	1,267	$	—	$	1,267
Gross loans receivable(1)	196,138		—		196,138
Prepaid expenses and other	687		—		687
Property and equipment	460		—		460
Right-of-use assets	616		—		616
Intangibles	50,876		3,572		54,448
Deferred tax assets	2,741		908		3,649
Total assets	$	252,785	$	4,480	$	257,265

Liabilities
Accounts payable and accrued liabilities	$	9,356	$	—	$	9,356
Credit facilities	174,367		—		174,367
Lease liabilities	616		—		616
Total liabilities	$	184,339	$	—	$	184,339

Net assets acquired	$	68,446	$	4,480	$	72,926
Total consideration paid	113,347		—		113,347
Goodwill	$	44,901	$	(4,480)	$	40,421
(1) The gross contractual loans receivables as of March 10, 2021 were $208.6 million, of which the Company estimates $12.5 million will not be collected.

During the year ended December 31, 2021, the Company recorded a cumulative net measurement period adjustment that decreased goodwill by $4.5 million. The ~~stock options that~~measurement period adjustment would have ~~been granted under~~resulted in an insignificant increase in amortization expense related to the ~~Plan thus far typically vest at a rate of 20% per year over a 5-year period, have a term of 10 years and are subject to limitations on transferability.~~

~~During~~merchant relationships intangible asset during the first quarter of ~~2017, we granted an incremental 54,396 stock options at an exercise price~~2021 when the Company acquired Flexiti. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of ~~$8.86 per share.~~ the acquisition date and did not result from intervening events subsequent to such date. As of December 31, 2021, the Company completed the determination of the fair values of the acquired identifiable assets and liabilities.

The ~~options vest ratably~~following table sets forth the components of identifiable intangible assets acquired, as adjusted for measurement period adjustments, and their estimated useful lives as of the date of acquisition (dollars in thousands):


	Fair Value		Useful Life
Developed technology	$	31,827	5.0 years
Merchant relationships	19,684		5.0 years
Customer relationships	2,937		3.0 years
Total identified intangible assets	$	54,448

Goodwill of $40.4 million represents the excess of the consideration paid over a three year period and are subject to limitations on transferability. We also granted an incremental 45,000 stock options at an exercise price of $8.86 per share. The options primarily vest ratably over a five year period and are subject to limitations on transferability. Thethe fair value of the ~~options granted~~net tangible and intangible assets acquired. The goodwill was primarily attributed to expected synergies created with the Company’s future product offerings and the value of the combined workforce. Goodwill and the intangibles from this transaction are not deductible for Canadian income tax purposes because this was a stock acquisition.

In connection with the acquisition, the Company recognized contingent cash consideration of $20.6 million as of the acquisition date. The contingent consideration is based on Flexiti achieving certain operating metrics from April 1, 2021 through March 31, 2023, including revenue less NCOs and loan originations. Cash consideration can range from zero to $32.8 million over the period. As of December 31, 2022, the estimated value of the contingent cash consideration increased to $16.9 million. Refer to Note 5, "Fair Value Measurements" for additional information regarding fair value inputs related to the contingent cash consideration.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

~~was calculated at each grant date using a Black-Scholes option-pricing model which assumed~~In connection with the ~~following weighted average assumptions: expected volatility of 45.3%, expected term of 6.1 years, risk-free interest rate of 2.2%, and expected dividend yield of 0%.~~

~~For~~acquisition, the ~~year ended December 31, 2016,~~Company also granted RSUs to certain Flexiti employees who joined the Company, with grant-date fair value ~~of each stock option grant was estimated at~~totaling approximately $8.1 million. Of that total, $4.0 million relates to RSU contingent consideration structured similar to the date of the grant using a Black-Scholes option pricing model based on the following assumptions: risk free interest rate of 1.9%, expected term of options of 6.0 years, expected volatility of 44.7% and no expected dividends. There were no awards granted in 2015.

~~Estimates of fair value are not intended~~contingent cash consideration described above. All RSU grants to predict actual future events or the value ultimately realized by individuals who receive equity awards, and subsequent events are not indicative of the reasonableness of our original estimates of fair value. We have estimated the expected term of our stock options using a formula considering the weighted average vesting term and the original contract term. The expected volatility is estimated based upon the historical volatility of publicly traded stocks from our industry sector (the alternative financial services sector). The expected risk-free interest rate is based on an average of various U.S. Treasury rates. We estimate forfeitures at the grant date based on its historical forfeiture rates.

~~Share-based~~Flexiti employees will be ratably recognized as stock-based compensation ~~is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis~~ over the requisite service ~~period. See~~ period of two years ending July 2023. Refer to Note ~~1. "Summary of Significant Accounting Policies and Nature of Operations"~~11, "Share-based Compensation" for ~~additional~~further information ~~on our share-based compensation.~~related to these RSUs.

The ~~following table summarizes our stock option activity~~Company incurred costs related to this acquisition of $3.3 million that were recorded in "Other operating expense" in the U.S. Direct Lending segment in the accompanying Consolidated Statement of Operations for the year ended December 31, ~~2017:~~2022.

Ad Astra

Stock Options Weighted Average Exercise Price Weighted Average Contractual Term (years) Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2016 1,879,308
$ 2.73

Granted 99,396
$ 8.86

Exercised —
—

Forfeited (1,224 ) $ 3.39

Outstanding at December 31, 2017 1,977,480
$ 3.04
5.2
$ 21,831
Options exercisable at December 31, 2017 1,520,688
$ 2.52
4.2
$ 17,579

On January 3, 2020, the Company acquired 100% of the outstanding stock of Ad Astra, a related party, for $14.4 million, net of cash received. Prior to the acquisition, Ad Astra had been the Company's exclusive provider of third-party collection services for owned and managed loans in the Legacy U.S. Direct Lending Business that are in later-stage delinquency.

~~Grants~~

The Company began consolidating the financial results of ~~restricted stock currently consist~~this acquisition in Consolidated Financial Statements on January 3, 2020. Prior to the acquisition, and for the year ended December 31, 2019, Ad Astra incurred $15.5 million of ~~restricted stock units (“RSUs”). Grants~~costs that were reflected in "Direct operations," consistent with the presentation of ~~restricted stock are valued~~other internal collection costs. Subsequent to the acquisition, Ad Astra incurred $10.0 million and $9.6 million of operating expense during the years ended December 31, 2021 and 2020, respectively.

The transaction was accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company was the acquirer for purposes of accounting for the business combination. The values assigned to the assets acquired and liabilities assumed were based on their estimates of fair value available. During March 2020, the Company completed the determination of the fair values of the acquired identifiable assets and liabilities.

The following table summarizes the allocation of the estimated fair values of the assets acquired and liabilities assumed at the date of ~~grant based~~acquisition:


(in thousands)	Amounts acquired on January 3, 2020
Assets
Cash and cash equivalents	$	3,360
Accounts receivable	465
Property and equipment	358
Intangible assets	1,101
Goodwill	14,791
Operating lease asset	235
Total assets	$	20,310

Liabilities
Accounts payable and accrued liabilities	2,264
Operating lease liabilities	235
Total liabilities	$	2,499

Total cash consideration transferred	$	17,811

Goodwill of $14.8 million represents the excess over the fair value of ~~our common stock~~the net tangible and ~~are expensed using~~intangible assets acquired. The goodwill was primarily attributed to expected synergies created through cost and process efficiencies in the ~~straight-line method over the service period. Grants~~collections process. The total estimated tax-deductible Goodwill as a result of RSUs do not confer full stockholder rights such as voting rights and cash dividends, but provide for additional dividend equivalent RSU awards in lieu of cash dividends. Unvested shares of restricted stock may be forfeited upon termination of employment withthis transaction is $15.4 million.

In January 2023, the Company ~~depending on the circumstances~~ceased operations of ~~the termination, or failure to achieve the required performance condition, if applicable.~~Ad Astra.

~~A summary of the status of non-vested restricted stock as of December 31, 2017, and changes during the year is presented in the following table:~~

DIVESTITURE

100

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Non-vested Restricted Stock Shares
Weighted
Average
Grant Date
Fair Value
December 31, 2016 —
—
Granted 1,516,241
$ 14.00
Vested —
—
Forfeited —
—
December 31, 2017 1,516,241
$ 14.00

~~Share-based compensation expense included in~~Legacy U.S. Direct Lending Business

On July 8, 2022, the ~~Consolidated Statements~~Company completed the divestiture of ~~Income as a component~~its Legacy U.S. Direct Lending Business to Community Choice Financial, for total sale proceeds of ~~Corporate expenses is summarized in the following table:~~

(dollars in thousands) 2017 2016 2015
Pre-tax share-based compensation expense $ 965
$ 1,148
$ 1,271
Income tax benefit (386 ) (459 ) (508 )
Total share-based compensation expense, net of tax $ 579
$ 689
$ 763

As$349.2 million, net of ~~December 31, 2017, there was $0.9~~working capital adjustments, comprised of $314.2 million of ~~unrecognized compensation cost, net~~cash received at close and $35.0 million in cash payable in monthly installment payments over the subsequent 12 months.

The divestiture resulted in a gain of ~~estimated forfeitures, related to share-based awards, which will be recognized over a weighted-average period of 2.94 years.~~

~~NOTE 13 – INCOME TAXES~~

~~Income tax expense (benefit) is comprised of the following:~~

(in thousands) 2017 2016 2015
Current tax provision

Federal $ 20,829
$ 24,508
$ 8,716
State 2,445
5,495
486
Foreign 10,542
13,254
11,146
Total current provision 33,816
43,257
20,348
Deferred tax provision (benefit)

Federal 6,283
186
(1,167 )
State 2,647
(134 ) (221 )
Foreign (170 ) (732 ) (855 )
Total deferred tax provision (benefit) 8,760
(680 ) (2,243 )
Total provision for income taxes $ 42,576
$ 42,577
$ 18,105

On December 22, 2017, H.R. 1, commonly referred to as the Tax Cuts and Jobs Act of 2017 (“the TCJA”) was signed by the U.S. President, which enacted various changes to the U.S. corporate tax law. Some of the most significant provisions affecting the Company include a reduced U.S. corporate income tax rate from 35% to 21% effective in 2018 and a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions. Pursuant to ASC 740, the Company is required to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities in the quarter the tax law change is enacted. Due to the complexities involved in accounting for the enactment of the TCJA, SEC Staff Accounting Bulletin (“SAB”) 118 allows taxpayers to provide a provisional estimate of the impacts of the TCJA in its earnings$68.4 million for the year ended December 31, ~~2017. Accordingly, based~~2022, which was recorded in "Gain on sale of business" on the ~~current information available,~~Consolidated Statement of Operations. Per ASC 205, the ~~Company~~sale of the business is not classified as discontinued operations in the Company’s operations or financial results.

The following table presents the amounts attributable to each category recorded ~~estimated provisional additional~~in the Company’s Consolidated Balance Sheet as of the date of divestiture of the Legacy U.S. Direct Lending Business (in thousands):


	July 8, 2022
Assets
Cash, cash equivalents and restricted cash	$	21,292
Loans receivable	162,147
Right of use asset	39,326
Goodwill	91,131
Other assets (1)	30,690
Total assets	$	344,586

Liabilities
Accounts payable and accrued liabilities	$	(8,947)
Right of use liability	(43,433)
Liability for losses on CSO lender-owned consumer loans	(5,628)
Other long term liabilities (2)	(5,815)
Total liabilities	(63,823)

Net assets sold	280,763
Total proceeds	349,207
Total pretax gain on sale of business	$	68,444
(1) Includes income tax receivable, property and equipment, intangibles, deferred tax assets and other assets.
(2) Includes deferred revenue, income taxes payable, deferred tax liability and other long-term liabilities

The Legacy U.S. Direct Lending Business had pre-tax net income ~~tax~~ of ~~$3.9 million. This charge~~$60.7 million year ended December 31, 2022 and $140.2 million for the year ended December 31, 2021. Pre-tax net income is comprised of ~~expense of $8.1 million~~net revenue and expenses directly related to the ~~deemed~~Legacy U.S. Direct Lending Business, which does not include certain costs recorded in the U.S. Direct Lending operating segment that are not classified as disposed of, such as interest expense on the 7.50% Senior Secured Notes and certain corporate expenses.

101

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

repatriation of unremitted earnings of foreign subsidiaries and a benefit of $4.2 million related to the remeasurement of the company’s net deferred tax liabilities arising from a lower U.S. corporate tax rate. The ultimate impact may differ from these provisional amounts, possibly materially, due to among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Tax Act. We intend to complete our accounting under the Tax Act within the measurement period set forth in SAB 118. The incremental expense for the deemed repatriation of unremitted earnings of foreign subsidiaries will be paid in cash as follows:

Tax Period
Payment Due
(in thousands)
2017 $ 644
2018 644
2019 644
2020 644
2021 644
2022 1,208
2023 1,610
2024 2,013
Total $ 8,051

The benefit associated with the remeasurement of the company's net deferred tax liabilities arising from a lower U.S corporate tax rate will be recognized as cash benefits at varying times as related assets and liabilities impact current tax expense.

Additional impacts from the enactment of the TCJA will be recorded as they are identified during the remeasurement period ending no later than December 22, 2018 as provided for in SAB 118. The charge recorded for the year represents the company’s best estimate of the impact of the TCJA.

As of December 31, 2017, we have estimated and provided U.S. net tax of $8.1 million on our cumulative undistributed earnings as part of the repatriation tax provision in the TCJA. We intend to reinvest our foreign earnings indefinitely in our non-U.S. operations and therefore have not provided for any non-U.S. withholding tax that would be assessed on dividend distributions. If the earnings of $154.8 million were distributed to the U.S., we would be subject to estimated Canadian withholding taxes of approximately $7.7 million. In the event the earnings were distributed to the U.S., we would adjust our income tax provision for the period and would determine the amount of foreign tax credit that would be available.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

~~The sources of deferred income tax assets (liabilities) are summarized as follows:~~

(in thousands) 2017 2016
Deferred tax assets related to:

Loans receivable $ 1,027
$ 8,142
Accrued expenses and other reserves 3,668
8,630
Compensation accruals 3,921
4,387
Deferred revenue 86
247
State and provincial net operating loss carryforwards 822
516
Foreign net operating loss and capital loss carryforwards 15,847
12,953
Tax credit carryforwards —
284
Gross deferred tax assets 25,371
35,159
Less: Valuation allowance (17,570 ) (14,072 )
Net deferred tax assets $ 7,801
$ 21,087
Deferred tax liabilities related to:

Property and equipment $ (2,776 ) $ (5,564 )
Goodwill and other intangible assets (15,395 ) (17,015 )
Prepaid expenses and other assets (344 ) (186 )
Gross deferred tax liabilities (18,515 ) (22,765 )
Net deferred tax liabilities $ (10,714 ) $ (1,678 )

~~Deferred tax assets and liabilities are included on the following line items in the Consolidated Balance Sheets:~~

(in thousands) 2017 2016
Net current deferred tax assets $ 772
$ 12,635
Net long-term deferred tax liabilities (11,486 ) (14,313 )
Net deferred tax liabilities $ (10,714 ) $ (1,678 )

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

~~Differences between our effective tax rate computed on net earnings before income taxes and the statutory federal income tax rate are as follows:~~

(in thousands) 2017 2016 2015
Income tax expense using the statutory federal rate in effect $ 32,105
$ 37,807
$ 12,556
Tax effect of:

State, local and provincial income taxes, net of federal benefit 7,164
9,045
4,373
Tax credits (450 ) (713 ) —
Nondeductible expenses 536
521
263
Impact of goodwill impairment charges —
—
310
Nontaxable income —
—
—
Foreign exchange gain/loss on intercompany loan 899
—
(1,423 )
Valuation allowance for foreign and state net operating loss and capital loss carryforwards 2,393
3,129
5,827
Effects of foreign rates different than U.S. statutory rate (5,370 ) (7,569 ) (3,350 )
Deferred remeasurement 886
205
62
Repatriation tax 8,100
—
—
Deferred remeasurement due to the TCJA (4,162 ) —
—
Other 476
152
(513 )
Total provision for income taxes $ 42,577
$ 42,577
$ 18,105
Effective tax rate 46.4 % 39.4 % 50.5 %
Statutory federal tax rate 35.0 % 35.0 % 35.0 %

~~At December 31, 2017 and December 31, 2016 we had no reserves related to uncertain tax positions.~~

The tax years 2014 through 2016 remain open to examination by the taxing authorities in the U.S. The tax years 2010 through 2016 remain open to examination by the taxing authorities in the UK. The tax years 2012 through 2016 remain open to examination by the taxing authorities in Canada. We expect no material change related to our current positions in recorded unrecognized income tax benefit liability in the next twelve months.

~~We file income tax returns in U.S. federal jurisdictions, the U.K., Canada (including provinces), and various state jurisdictions.~~

~~A summary of the valuation allowance is as follows:~~

(in thousands) 2017 2016 2015
Balance at the beginning of year $ 14,072
$ 13,097
$ 5,447
Revaluation of valuation allowance due to change in statutory rates —
(1,234 ) —
Increase to balance charged as expense 2,393
3,129
5,827
(Decrease) increase to balance charged to Other Comprehensive Income (101 ) 1,627
2,099
Effect of foreign currency translation 1,209
(2,547 ) (276 )
Balance at end of year $ 17,573
$ 14,072
$ 13,097

As of December 31, 2017, we had as filed foreign operating loss carryforwards of $14.4 million and additional accrued foreign operating loss and capital loss carryforwards of $2.1 million. The UK net operating loss carryforwards do not expire and can be used at any time. The Canadian net operating loss carryforwards expire after 20 years. As of December 31, 2017, we have $0.9 million of deferred tax assets on foreign entities with foreign operating loss carryforwards. We are not expecting to have taxable income in the near future in these jurisdictions and have recorded a $16.5 million valuation allowance related to these foreign operating losses and a $0.9 million valuation allowance related to the deferred tax assets. As of December 31, 2017, we had as filed

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

state operating loss carryforwards of $0.2 million and accrued utilization of state operating loss carryforwards and additional state operating losses that are not material. These carryforwards expire in varying amounts in years 2018 through 2037 and are generated in states in which we may have taxable income in the near future. We have recorded a valuation allowance of $0.2 million related to these state operating losses. As of December 31, 2017 we have a state tax credit carryforward of $0.3 million. During 2017, 2016 and 2015 we did not record any estimated interest or penalties.

~~NOTE 14 – FINANCIAL INSTRUMENTS AND CONCENTRATIONS~~

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We are required to use valuation techniques that are consistent with the market approach, income approach, and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on observable market data obtained from independent sources, or unobservable, meaning those that reflect our own estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs.

~~The three levels of inputs used to measure fair value are listed below.~~

~~Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have access to at the measurement date.~~

Level 3 – Unobservable inputs reflecting our own judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. We develop these inputs based on the best information available, including our own data.

~~Financial Assets and Liabilities Not Measured at Fair Value~~

~~The table below presents the assets and liabilities that were not measured at fair value at December 31, 2017.~~

Estimated Fair Value
(dollars in thousands) Carrying Value December 31,
2017 Level 1 Level 2 Level 3 December 31, 2017
Financial assets:
Cash $ 162,374
$ 162,374
$ —
$ —
$ 162,374
Restricted cash 12,117
12,117
—
—
12,117
Loans receivable, net 363,269
—
—
363,269
363,269
Investment 5,600
—
—
5,600
5,600
Financial liabilities:
Credit services organization guarantee liability $ 17,795
$ —
$ —
$ 17,795
$ 17,795
2017 Senior Secured Notes 585,823
—
—
663,475
663,475
Non-Recourse U.S. SPV facility 120,402
—
—
124,590
124,590

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

~~The table below presents the assets and liabilities that were not measured at fair value at December 31, 2016.~~

Estimated Fair Value
(dollars in thousands) Carrying Value December 31,
2016 Level 1 Level 2 Level 3 December 31, 2016
Financial assets:
Cash $ 193,525
$ 193,525
$ —
$ —
$ 193,525
Restricted cash 7,828
7,828
—
—
7,828
Loans receivable, net 247,004
—
—
247,004
247,004
Financial liabilities:
Credit services organization guarantee liability $ 17,052
$ —
$ —
$ 17,052
$ 17,052
May 2011 Senior Secured Notes 223,164
216,449
—
—
216,449
May 2012 Senior Secured Notes 89,734
86,625
—
—
86,625
February 2013 Senior Secured Notes 101,184
96,250
—
—
96,250
February 2013 Cash Pay Notes 124,365
118,301
—
—
118,301
Non-Recourse U.S. SPV facility 63,054
—
—
68,311
68,311
ABL facility 23,406
—
—
23,406
23,406

Loans receivable are carried on the Consolidated Balance Sheets net of the allowance for estimated loan losses, which is calculated primarily based upon models that back-test subsequent collections history for each type of loan product. The unobservable inputs used to calculate the carrying value include additional quantitative factors, such as current default trends and changes to the portfolio mix are also considered in evaluating the accuracy of the models; as well as additional qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Loans generally have terms ranging from 1 day to 48 months. The carrying value of loans receivable approximates the fair value.

In connection with our CSO programs, the accounting for which is discussed in detail in Note 1, we guarantee consumer loan payment obligations to unrelated third-party lenders for loans that we arrange for consumers on the third-party lenders’ behalf. We are required to purchase from the lender defaulted loans we have guaranteed. The estimated fair value of the guarantee liability related to CSO loans we have guaranteed was $17.8 million and $17.1 million as of December 31, 2017 and December 31, 2016, respectively. The initial measurement of this guarantee liability is recorded at fair value using Level 3 inputs with subsequent measurement of the liability measured as a contingent loss. The unobservable inputs used to calculate fair value include the nature of the loan products, the creditworthiness of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions.

The fair value of our Senior Secured Notes was based on broker quotations. The fair values of the Non-Recourse U.S. SPV facility and the ABL facility were based on the cash needed for final settlement.

~~Derivative Financial Instrument~~

We had a cash flow hedge in which the hedging instrument was a forward extra to sell GBP 4,800,000 that expired in May 2017. We performed an assessment that determined that all critical terms of the hedging instrument and the hedged transaction match and as such qualitatively concluded that changes in the hedge’s intrinsic value would completely offset the change in the expected cash flows based on changes in the spot rate.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

Since the effectiveness of this hedge was assessed based on changes in the hedge’s intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness.

Changes in the hedge’s intrinsic value, to the extent that they were effective as a hedge, were recorded in other comprehensive income. As of December 31, 2017 we have recorded a realized loss of $0.3 million, in our consolidated statement of income associated with this hedge.

~~Concentration Risk~~

We are subject to regulation by federal, state and provincial governmental authorities that affect the products and services that we provide, particularly Single-Pay loans. The level and type of regulation for payday advance loans varies greatly by jurisdiction, ranging from jurisdictions with moderate regulations or legislation, to other jurisdictions having very strict guidelines and requirements.

Revenues originated in Texas, Ontario, and California represented approximately 25.6%, 12.9%, and 17.7%, respectively, of our consolidated total revenues for the year ended December 31, 2017. Revenues originated in Texas, Ontario, and California represented approximately 26.1%, 14.4%, and 15.1%, respectively, of our consolidated total revenues for the year ended December 31, 2016.

To the extent that laws and regulations are passed that affect the manner in which we conduct business in any one of those markets, our financial position, results of operations and cash flows could be adversely affected. Additionally, our ability to meet our financial obligations could be negatively impacted.

We hold cash at major financial institutions that often exceed FDIC insured limits. We manage our concentration risk by placing our cash deposits in high quality financial institutions and by periodically evaluating the credit quality of the financial institutions holding such deposits. Historically, we have not experienced any losses due to such cash concentration.

Financial instruments that potentially subject us to concentrations of credit risk primarily consist of our loans receivable. Concentrations of credit risk with respect to loans receivable are limited due to the large number of customers comprising our customer base.

~~Purchase of Cognical Holdings Inc. Preferred Shares~~

In April 2017, we purchased 2,926,715 preferred shares of Cognical Holdings, Inc. ("Cognical") for $5.0 million and in October 2017 we purchased an additional 365,839 preferred shares for $0.6 million. As a result of these transactions, we own 9.4% of the equity of Cognical. Cognical has also awarded us warrants, subject to a certain vesting schedule, to purchase the common stock of Cognical in partial consideration of services provided by Cognical. These purchases are recorded in Other assets on our Consolidated Balance Sheets, and we have accounted for this investment and its related warrants using the fair value method of accounting.

~~Cognical operates under an online website,~~ ~~www.zibby.com~~. Zibby is a leasing platform for online, brick and mortar and omni-channel retailers. Customers can apply in 30 seconds in-store or via the Zibby button on a retailer’s website and be approved for $300 to $3,500. Zibby increases retailer sales by providing a fast and easy lease payment option for nonprime customers seeking to acquire furniture, appliances, electronics and other consumer durables.

NOTE 15 – ~~STOCKHOLDERS' EQUITY~~RELATED PARTY TRANSACTIONS

In ~~connection with the formation of CURO Group in 2013, the stockholders entered into an Investor Rights Agreement. In connection with the completion of the Company's Initial Public offering,~~November 2021, the Company entered into ~~the Amended and Restated Investors Rights~~a Share Repurchase Agreement with ~~certain~~a trust advised by a director and greater than 10% owner of the ~~company's existing shareholders, including~~Company. See Note 23 , "Share Repurchase Program" for further information.

The Company has historically used Ad Astra as its third-party collection service for the ~~Founder Holders~~Legacy U.S. Direct Lending Business. The Company acquired Ad Astra from the Company's founders on January 3, 2020. See Note 1 4 - "Acquisitions and ~~the Freidman Fleisher & Lowe Capital Partners II, L.P. (and its affiliated funds, the “FFL Funds”), whom we collectively refer to as the principal holders. Pursuant~~Divestiture "for further information. Prior to the ~~amended and restated~~

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

~~investors rights agreement,~~acquisition, the Company ~~has agreed~~generally referred loans that were between 91 and 121 days delinquent to ~~register~~Ad Astra for collections and Ad Astra earned a commission fee equal to 30% of any amounts successfully recovered. The Company ceased Ad Astra operations in January 2023.

The Company historically entered into several lease agreements for its corporate office and stores in which the ~~sale of shares of our common stock held~~Company operated, with several real estate entities that are owned by ~~the principal holders under certain circumstances.~~

We filed an amendment to our certificate of incorporation on December 6, 2017, that effected a 36-for-1 split of our common stock. Additionally, we filed an amended and restated certificate of incorporation on December 11, 2017, that, among other things, changed the authorized number of shares of our common stock to 250,000,000, consisting of 225,000,000 shares of common stock, with a par value of $0.001 per share and 25,000,000 shares of preferred stock, with a par value of $0.001 per share. All share and per share data have been retroactively adjusted for all periods presented to reflect the stock split as if the stock split had occurred at the beginningone or more of the ~~earliest period presented.~~

On December 7, 2017, our stock began trading on the New York Stock Exchange ("NYSE") under the symbol "CURO." We completed our initial public offering ("IPO") of 6,666,667 shares of common stock on December 11, 2017, at a price of $14.00 per share. In connection with the closing, the underwriters had a 30-day option to purchase up to an additional 1,000,000 shares at the initial public offering prices, less the underwriting discount to over-allotments, if any. The underwriters exercised this option on January 5, 2018.

Our net proceeds from the IPO, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, were $81.1 million. On March 7, 2018, we used the net proceeds to redeem portionsfounders of the ~~12.00% Senior Secured Notes due 2022 and to pay related fees, expenses, premiums and accrued interest. See Note 25 - Subsequent Events for additional information about this transaction.~~

AsCompany. These leases are discussed in Note ~~11 Long-Term Debt~~11 , ~~CFTC paid us a $130.1 million dividend in February 2017~~ "Leases." All but one of these related party leases related to ~~fund~~ the redemption of the 12.00% Senior Cash Pay Notes. We paid dividends of $28.0 million and $8.5 million to our stockholders, in May 2017 and August 2017, respectively. On October 16, 2017, we declared a dividend of $5.5 million,Legacy U.S. Direct Lending Business, which was ~~paid to our stockholders on October 16, 2017. In connection with issuance of $135.0 million of additional 12.00% Senior Secured Notes on November 2, 2017, CFTC paid a cash dividend~~sold in ~~the amount of $140.0 million to us, and we declared a dividend of $140.0 million, which was paid to our stockholders on November 2, 2017.~~2022.

NOTE 16 – ~~SUPPLEMENTAL CASH FLOW INFORMATION~~PREPAID EXPENSES AND OTHER

Components of Prepaid expenses and other assets were as follows (in thousands):


	December 31, 2022		December 31, 2021
Settlements and collateral due from third-party lenders (1)	$	—	$	5,465
Fees receivable from customers under CSO programs (1)	—		8,412
Prepaid expenses	13,963		16,243
Other assets	39,094		11,918
Total prepaid expenses and other	$	53,057	$	42,038
(1) All balances in connection with the CSO programs were disposed of on July 8, 2022 upon the completion of the divestiture of the Legacy U.S. Direct Lending Business.

~~Supplemental cash flow information is as follows:~~

Year Ended December 31,
(dollars in thousands) 2017 2016 2015
Cash paid for:
Interest $ 60,054
$ 61,019

$ 61,802
Income taxes 26,863
43,650

26,001
Non-cash investing activities:

Payment for repurchase of May 2011 Senior Secured Notes accrued in accounts payable —
18,939

—
Property and equipment accrued in accounts payable 1,631
3,338

4,758

NOTE 17 – ~~SEGMENT REPORTING~~PROPERTY AND EQUIPMENT

~~Segment information is prepared on~~

The classification of property and equipment was as follows (in thousands):


	December 31, 2022		December 31, 2021
Leasehold improvements	$	52,031	$	122,049
Furniture, fixtures and equipment	44,019		43,276
Property and equipment, gross	96,050		165,325
Accumulated depreciation and amortization	(64,093)		(110,690)
Property and equipment, net	$	31,957	$	54,635

Depreciation expense for continuing operations was $13.5 million, $13.2 million and $14.5 million for the ~~same basis that our chief operating decision maker reviews financial information for operational decision making purposes. We have three reportable operating segments: the U.S., Canada and the U.K.~~

~~U.S. - As of~~years ended December 31, ~~2017, we operated a total~~2022, 2021 and 2020, respectively.

NOTE 18 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Components of ~~214 U.S. retail locations~~Accounts payable and we have online presence in 27 states. We provide Single-Pay Loans, Installment Loans and Open-End Loans, vehicle title loans, check cashing, gold buying, money transfer services, reloadable prepaid debit cards and a number of other ancillary financial products and services to our customers in the United States.accrued liabilities were as follows (in thousands):


	December 31, 2022		December 31, 2021
Trade accounts payable	$	14,100	$	43,094
Money orders payable	2,112		3,460
Accrued taxes, other than income taxes	1,248		1,053
Accrued payroll and fringe benefits	16,487		41,658
Other accrued liabilities	39,880		32,169
Total accounts payable and accrued liabilities	$	73,827	$	121,434

102

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

~~Canada -We operate under the Cash Money~~The decrease in accounts payable and ~~LendDirect brands in Canada. As of~~accrued liabilities from December 31, 2016 we operated a total of 193 stores across seven Canadian provinces and territories and we have online presence in five provinces. We provide Single-Pay Loans, Installment Loans, check cashing, money transfer services, foreign currency exchange, reloadable prepaid debit cards, and a number of other ancillary financial products and services2021 to ~~our customers in Canada.~~

~~U.K. -We operate under~~December 31, 2022 was primarily the Speedy Cash ®, WageDayAdvance and Juo Loans brands in the United Kingdom. During 2017, we closed our remaining 13 retail Speedy Cash locations in the United Kingdom as we moved to focus on our online loans to U.K. customers, offered as WageDayAdvance and Juo Loans.

Management’s evaluation of segment performance utilizes gross margin and operating profit before the allocation of interest expense and professional services. The following reporting segment results reflect this basis for evaluation and were determined in accordance with the same accounting principles used in our consolidated financial statements.

~~The following table illustrates summarized financial information concerning our reportable segments:~~

Year Ended December 31,
(dollars in thousands) 2017 2016 2015
Revenues by segment:
U.S. $ 737,729
$ 606,798
$ 573,664
Canada 186,408
188,078
184,859
U.K. 39,496
33,720
54,608
Consolidated revenue $ 963,633
$ 828,596
$ 813,131
Gross margin by segment:
U.S. $ 267,215
$ 204,328
$ 151,628
Canada 67,950
78,639
77,469
U.K. 14,072
10,289
9,504
Consolidated gross margin $ 349,237
$ 293,256
$ 238,601
Segment operating income (loss):
U.S. $ 51,459
$ 56,778
$ 4,200
Canada 50,797
60,482
56,208
U.K. (10,527 ) (9,239 ) (24,534 )
Consolidated operating profit $ 91,729
$ 108,021
$ 35,874
Expenditures for long-lived assets by segment:
U.S. $ 7,405
$ 10,125
$ 8,642
Canada 1,309
5,872
11,062
U.K. 1,043
29
128
Consolidated expenditures for long-lived assets $ 9,757
$ 16,026
$ 19,832

~~The following table provides the proportion of gross loans receivable by segment:~~

(dollars in thousands) December 31,
2017 December 31,
2016
U.S. $ 308,696
$ 206,215
Canada 104,551
66,988
U.K. 19,590
12,993
Total gross loans receivable $ 432,837
$ 286,196

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

The following table illustrates our net long-lived assets, comprised of property and equipment by segment. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located:

(dollars in thousands) December 31, 2017 December 31, 2016
U.S. $ 52,627
$ 58,733
Canada 32,924
34,310
U.K. 1,535
2,853
Total $ 87,086
$ 95,896

~~Our chief operating decision maker does not review assets by segment for purposes of allocating resources or decision-making purposes; therefore, total assets by segment are not disclosed.~~

~~NOTE 18 – CONTINGENT LIABILITIES~~

~~Harrison, et al v. Principal Investments, Inc. et al~~

On June 7, 2017, the parties reached a settlement in this matter. We have accrued approximately $2.3 million as a result of this settlement as of December 31, 2017. At a hearing before the District Court in Clark County, Nevada, on July 24, 2017 the court granted preliminary approvaldivestiture of the ~~settlement. On October 30, 2017, the court issued final approval of the class settlement.~~

~~Reimbursement Offer; Possible Changes~~Legacy U.S. Direct Lending Business in ~~Payment Practices~~

During 2017, it was determined that a limited universe of borrowers may have incurred bank overdraft or non-sufficient funds fees because of possible confusion about certain electronic payments we initiated on their loans. As a result, we have decided to reimburse such fees through payments or credits against outstanding loan balances, subject to per-customer dollar limitations, upon receipt of (1) claims from potentially affected borrowers stating that they were in fact confused by our practices and (2) bank statements from such borrowers showing that fees for which reimbursement is sought were incurred at a time that such borrowers might reasonably have been confused about our practices. Based on the terms of the reimbursement offer we are currently considering, we have recorded a $2.0 million liability for this matter as of December 31, 2017.

~~City of Austin~~

~~We were cited on~~ July 5, 2016 by the City of Austin, Texas for alleged violations of the Austin, Texas ordinance addressing products offered by CSOs. The Texas ordinances regulate aspects of products offered under our Credit Access Business programs, including loan sizes and repayment terms. We believe that: (1) the Austin ordinance (like its counterparts elsewhere in the state) conflicts with Texas state law and (2) our product in any event complies with the ordinance, when it is properly construed. The Austin Municipal Court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In September 2017, the Travis County Court reversed the Municipal Court’s decision and remanded the case for

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

~~further proceedings. We appealed the County Court's decision in October 2017,~~2022 and the ~~appeal is currently pending. We will not have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances~~decrease in ~~other Texas cities) for some time. A final adverse decision could potentially result in material monetary liability in Austin~~Accrued payroll and ~~elsewhere and would force us to restructure the loans we arrange in Texas.~~fringe benefits.

~~Other Legal Matters~~

We are also a defendant in certain routine litigation matters encountered in the ordinary course of our business. Certain of these matters may be covered to an extent by insurance. In the opinion of management, based upon the advice of legal counsel, the likelihood is remote that the impact of any pending legal proceedings and claims, either individually or in the aggregate, would have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

NOTE 19 – ~~OPERATING LEASES~~

Some of the leases are with related parties and have terms similar to the non-related party leases previously described. Rent expense on unrelated third-party leases for the years ended December 31, 2017, 2016 and 2015 was $23.6 million, $23.1 million and $23.3 million, respectively; and for related party leases was $3.3 million, $3.3 million and $3.2 million, respectively.

~~The following table summarizes the future minimum lease payments that we are contractually obligated to make under operating leases as of December 31, 2017 (in thousands):~~

Third Party Related Party Total
2018 $ 22,920
$ 3,396
$ 26,316
2019 20,046
3,241
23,286
2020 16,335
3,242
19,578
2021 13,212
3,278
16,489
2022 10,665
3,266
13,931
Thereafter 18,532
784
19,316
Total $ 101,709
$ 17,207
$ 118,916

~~NOTE 20 – RELATED PARTY TRANSACTIONS~~

We employ the services of Ad Astra Recovery Services, Inc. (“Ad Astra”), which is owned by our founders. Ad Astra provides third party collection activities for our U.S. operations. Generally, once loans are between 91 and 121 days delinquent we refer them to Ad Astra for collections. Ad Astra earns a commission fee equal to 30% of any amounts successfully recovered. Payments collected by Ad Astra on our behalf and commissions payable to Ad Astra are net settled on a one month lag. The net amount receivable from Ad Astra at December 31, 2017, 2016 and 2015 was $0.7 million, $0.6 million, and $0.2 million, respectively. These amounts are included in “Prepaid expenses and other” in the Consolidated Balance Sheets. The commission expense paid to Ad Astra for the years ended December 31, 2017, 2016 and 2015 was $12.4 million, $12.1 million and $10.6 million, respectively, and is included in “Other costs of providing services” in the Consolidated Statements of Income.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

We have entered into several operating lease agreements for our corporate office, collection office, and stores in which we operate, with several real estate entities that are related through common ownership. These operating leases are discussed in Note 19 - Operating Leases.

~~NOTE 21 –~~ BENEFIT PLANS

In conjunction with our IPO we instituted the 2017 Employee Stock Purchase Plan ("ESPP") that provides certain of our employees the opportunity to purchase shares of our common stock through separate offerings that may vary in terms. We have provided for the issuance of up to 2,500,000 shares to be utilized in the ESPP.

In 2015, wethe Company instituted a nonqualified deferred compensation plan that provides certain ~~of our~~ employees with the opportunity to elect to defer ~~his or her~~ base salary and performance-based compensation, which, upon such election, will be credited to the ~~applicable~~ participant’s deferred compensation account. Participant contributions are fully vested at all times. Each deferred compensation account ~~will be~~is invested in one or more investment funds made available by usthe Company and selected by the participant. WeThe Company may make discretionary contributions to the individual deferred compensation accounts, with the amount, if any, determined annually by ~~us. Our~~the Company. The Company's contributions vest over ~~a term of~~ three years. Each vested deferred compensation account will be paid out in either a lump sum or annual installments over a five or 10 year period as elected by the participant during enrollment. Payments shall be made or commence either ~~upon~~on January 1 of the year following a participant’s separation from service ~~with us~~ or a future date chosen by the participant at the time of enrollment. The plan is closed to new participants, and ongoing enrollment is only available to employees who had previously elected to make deferrals. The amount deferred under this plan totaled ~~$3.3~~$5.1 million, ~~$1.4~~$5.1 million and ~~$0.2~~$4.7 million as of December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively, and was recorded in "Other long-term ~~liabilities.~~liabilities" on the Consolidated Balance Sheet.

In 2014 we instituted a pension plan which covers all U.K. employees. Employees are automatically enrolled at 1% of their compensation, and we will match the employee’s contribution up to 3% of the employee’s compensation. Our contributions to the plan were $0.2 million, $0.2 million and $0.3 million for the years ended December 31, 2017, 2016 and 2015, respectively.

In 2013, wethe Company instituted a Registered Retirement Savings Plan (“RRSP”) which covers all Canadian employees. ~~We match~~The Company matches the employee contribution at a rate of 50% of the first 6% of compensation contributed to the RRSP. Employee contributions vest immediately. Employer contributions vest 50% after one year and 100% after two years. ~~Our~~In March 2021, the Company acquired Flexiti and instituted a RRSP which covers all full-time, permanent Canadian employees. For contact center employees, the Company matches the employee contribution at a rate of 50% of the first 6%of compensation contributed to the RRSP. For corporate employees, the Company matches the employee contribution at a rate of 100% of the first 6% of compensation contributed to the RRSP. Employee contributions vest immediately. Employer contributions vest 100% after one year of plan membership. The Company's combined contributions to ~~the RRSP~~these two RRSPs were ~~$0.2~~$0.5 million, ~~for each~~$0.4 million and $0.3 million as of ~~the years ended~~ December 31, ~~2017, 2016~~2022, 2021 and ~~2015.~~2020, respectively.

In 2010, wethe Company instituted a 401(k) retirement savings plan which covers all U.S. employees. Employees may voluntarily contribute up to 90% of their compensation ~~as defined,~~ to the 401(k) plan. ~~We match~~The Company matches the employee contribution at a rate of 50% of the first 6% of compensation contributed to the plan. ~~Employee contributions vest immediately.~~ Employer contributions vest ~~in full~~one-third for each of the first three years of employment until fully vested after three years of employment. ~~Our contributions~~The Company also provides a 401(k) plan covering all full-time employees, whereby employees can invest their gross pay up to 90% of their compensation by the 401(k) plan. The Company makes a matching contribution in an amount equal to: (i) 100% of the first 3% of an employee’s gross income contributed to the plan, plus (ii) 50% of the next 2% of an employee’s amount of the employee contributions that exceed 3% of gross pay but that do not exceed 5% of gross pay. The Company's combined contributions to these three plans were ~~$1.3~~$3.0 million, ~~$1.1~~$1.7 million and ~~$1.0~~$1.7 million for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively.

~~We own~~The Company owns life insurance policies on plan beneficiaries as an informal funding vehicle to meet future benefit obligations. These policies are recorded at their cash surrender value and are included in other assets. Income generated from policies is recorded ~~as other income.~~in "Salaries and benefits" on the Consolidated Statement of Operations. Refer to Note 5 , "Fair Value Measurements " for additional information.

NOTE 2220 – ~~EARNINGS PER SHARE~~CREDIT SERVICE ORGANIZATION

As a result of the sale of the Legacy U.S. Direct Lending Business on July 8, 2022, the Company no longer guarantees loans originated by third-party lenders through CSO programs. The Company will continue to present these loans in the paragraphs that follow based on historical practice and for comparability purposes. Refer to Note 14, "Acquisitions and Divestiture" for additional information.

The CSO fee receivables balance was $5.2 million at December 31, 2021 and is reflected in "Prepaid expenses and other" in the Consolidated Balance Sheets. The Company bore the risk of loss through its guarantee to purchase customer loans that were charged-off. The terms of these loans ranged up to six months. See Note 1, "Summary of Significant Accounting Policies and Nature of Operations" for further details of the Company's accounting policy.

As of December 31, 2021, the incremental maximum amount payable under all such guarantees was $38.4 million. This liability is not included in the Company's Consolidated Balance Sheets. The Company held no collateral in respect of the guarantees. The Company estimated a liability for losses associated with the guaranty provided to the CSO lenders, which was $6.9 million at December 31, 2021. This liability is reflected in "Liability for losses on CSO lender-owned consumer loans" in the Consolidated Balance Sheets.

The ~~following presents~~Company placed $5.5 million in collateral accounts for the ~~computation~~benefit of ~~basic earnings per share (in thousands, except per share amounts):~~lenders for the year ended December 31, 2021 which is reflected in "Prepaid expenses and other" in the Consolidated Balance Sheets. The balances required to be maintained in these

103

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Year Ended December 31,
2017 2016 2015
Basic: ⁽¹⁾

Net income $ 49,153
$ 65,444
$ 17,769
Weight average common shares 38,351
37,908
37,908
Basic earnings per share
$ 1.28

$ 1.73
$ 0.47
(1) The per share information has been adjusted to give effect to the 36-to-1 stock split of our common stock which was effective December 6, 2017.

collateral accounts varied by lender, typically based on a percentage of the outstanding loan balances held by the lender. The ~~following computation reconciles the differences~~percentage of outstanding loan balances required for collateral was negotiated between the ~~basic~~Company and ~~diluted earnings per share presentations (in thousands, except per share amounts):~~each lender.

Deferred revenue associated with the CSO program was immaterial as of December 31, 2021 and there were no costs to obtain, or costs to fulfill, capitalized under the program.

See Note 2 , "Loans Receivable and Revenue" for additional information related to loan balances and the revenue recognized under the program.

NOTE 21 – RESTRUCTURING AND STORE CLOSURES

Year Ended December 31,
2017 2016 2015
Diluted: ⁽¹⁾

Net income $ 49,153
$ 65,444
17,769
Weight average common shares (basic) 38,351
37,908
37,908
Dilutive effect of stock options 926
895
987
Weighted average common shares -- diluted 39,277
38,803
38,895
Diluted earnings per share $ 1.25

$ 1.69
$ 0.46
(1) The per share information has been adjusted to give effect to the 36-to-1 stock split of our common stock which was effective December 6, 2017.

2022 Restructuring

~~Potential common shares that would have~~

On October 5, 2022, our Board of Directors approved restructuring actions to reduce operating expenses through store closures and headcount reductions in both the ~~effect~~U.S. and Canada, and the elimination of ~~increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive~~duplicative corporate office functions in the U.S. Both the workforce reduction and store closures were aimed at reducing duplicative corporate functions and stores with overlapping customer populations as ~~such, these shares are not included~~a result of our acquisitions of Heights Finance in ~~calculating diluted earnings per share.~~ December of 2021 and First Heritage in July of 2022.

For the year ended December 31, ~~2016, there were 72,000 potential common shares not included~~2022, we incurred $16.0 million of expense related to our restructuring actions, of which $7.9 million relates to employee termination benefits resulting from the workforce reduction of approximately 150 employees, and $8.2 million in lease abandonment costs resulting from the closure of 89 stores in the ~~calculation of diluted earnings per share because their effect was anti-dilutive. For the years ended December 31, 2017~~U.S. and ~~2015, no potential common shares were excluded from the calculation of diluted earnings per share.~~

~~NOTE 23 - SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited)~~

Canada.

The following table ~~sets forth~~shows the ~~quarterly financial data for~~total restructuring costs incurred during the ~~years~~year ended December 31, ~~2017~~2022 (in thousands):


	Employee Termination Benefits		Lease Exit Costs		Total Restructuring Costs
Salaries and Benefits	$	6,601	$	—	$	6,601
Direct Operations	1,266		—		1,266
Other Operating Expense	—		8,171		8,171
Total	$	7,867	$	8,171	$	16,038

The following table shows the total amount incurred and ~~2016 (in thousands, except per share amounts):~~liability, which is recorded in accounts payables and other accrued liabilities in the Consolidated Balance Sheets, for restructuring-related costs as of December 31, 2022:


	Total Restructuring Costs
Accrued restructuring costs as of October 5, 2022	$	—
Restructuring costs incurred during the year ended December 31, 2022	$	16,038
Amount paid during the year ended December 31, 2022	$	(11,292)
Accrued restructuring costs as of December 31, 2022	$	4,746

2021 Store Closures

The Company closed or did not renew leases for 49 U.S. stores in Illinois (8), Oregon (2), Colorado (2), Washington (1), Texas (31), California (2), Louisiana (1), Nevada (1) and Tennessee (1), of which 19 and 30 stores closed in the second and third quarters of 2021, respectively. The Company exited Illinois entirely given that state's legislative changes that effectively eliminated the Company's product offerings. The store closure decisions in other states were made after extensive analysis and in response to ongoing migration of customer transactions toward the online channel and the impact of COVID-19 on store traffic and profitability.

104

Year ended December 31, 2017 March 31 June 30 September 30 December 31 Fiscal Year
Net Revenue $ 162,844
$ 151,498
$ 155,778
$ 167,287
$ 637,407
Gross Margin 94,905
82,002
80,166
92,164
349,237
Net income before income taxes 26,088
26,961
19,682
18,998
91,729
Net Income 16,638
16,342
9,762
6,411
49,153
Net Income per share - Basic $ 0.44
$ 0.43
$ 0.26
$ 0.15
$ 1.28
Net Income per share - Diluted $ 0.43
$ 0.42
$ 0.25
$ 0.15
$ 1.25

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The Company incurred $12.7 million of total one-time charges associated with the U.S. Direct Lending store closures during the year ended December 31, 2021 as follows:

Year ended December 31, 2016 March 31 June 30 September 30 December 31 Fiscal Year
Net Revenue $ 160,212
$ 136,278
$ 135,900
$ 137,917
$ 570,307
Gross Margin 94,173
68,851
67,035
63,197
293,256
Net income before income taxes 44,006
21,034
25,860
17,121
108,021
Net Income 26,910
13,172
15,777
9,585
65,444
Net Income per share - Basic $ 0.71
$ 0.35
$ 0.42
$ 0.25
$ 1.73
Net Income per share - Diluted $ 0.70
$ 0.34
$ 0.41
$ 0.24
$ 1.69


(in thousands)	Year Ended December 31, 2021 (1)
Store closure costs
Severance and employee costs	$	3,943
Lease termination costs	1,710
Net accelerated depreciation and write-off of ROU assets and lease liabilities	7,064
Total store closure costs	$	12,717

(1) During the year ended December 31, 2021, the Consolidated Statement of Operations included $3.9 million of store closure costs recorded within "Salaries and benefits" and $8.7 million recorded within "Other operating expense."

NOTE 2422 – ~~CONDENSED CONSOLIDATING FINANCIAL INFORMATION~~DISCONTINUED OPERATIONS

On February ~~15, 2017, CFTC issued $470.0 million aggregate principal amount 12.00% senior secured notes due March 1, 2022, the proceeds of which~~ were used together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly owned subsidiary, CURO Intermediate, (ii) redeem our outstanding 12.00% Senior Cash Pay Notes due 2017, and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. The Senior Secured Notes were sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”); or outside the U.S. to non-U.S. Persons in compliance with Regulation S of the Securities Act.

~~On November 2, 2017, CFTC issued $135.0 million aggregate principal amount of additional 12.00% Senior~~

~~The following condensed consolidating financing information, which has been prepared~~25, 2019, in accordance with the ~~requirements~~provisions of the U.K. Insolvency Act 1986 and as approved by the Boards of Directors of the U.K. Subsidiaries, insolvency practitioners from KPMG were appointed as Administrators for ~~presentation~~the U.K. Subsidiaries. The effect of ~~Rule 3-10(d)~~the U.K. Subsidiaries’ entry into administration was to place their management, affairs, business and property of ~~Regulation S-X promulgated~~the U.K. Subsidiaries under the ~~Securities Act,~~direct control of the Administrators. Accordingly, the Company deconsolidated the U.K. Subsidiaries, which comprised the U.K. reportable operating segment, as of February 25, 2019 and classified them as Discontinued Operations for all periods presented.

The following table presents the ~~condensed consolidating financial information separately for:~~results of operations of the U.K. Subsidiaries, which meet the criteria of Discontinued Operations and, therefore, are excluded from the Company's results of continuing operations (in thousands):

~~(i)~~

~~CFTC as~~

For the ~~issuer of the 12.00% senior secured notes;~~Year Ended December 31,

2020

~~(ii)~~Revenue

~~CURO Intermediate as the issuer of the 10.75% senior secured notes that were redeemed in February 2017;~~

—

~~(iii)~~Provision for losses

Our subsidiary guarantors, which are comprised of our domestic subsidiaries, excluding CFTC and CURO Intermediate (the “Subsidiary Guarantors”), on a consolidated basis, which are 100% owned by CURO, and which are guarantors of the 12.00% senior secured notes issued in February 2017 and the 10.75% senior secured notes redeemed in February 2017;

—

~~(iv)~~Net revenue

~~Our other subsidiaries on a consolidated basis, which are not guarantors of the 12.00% senior secured notes or the 10.75% senior secured notes (the “Subsidiary Non-Guarantors”)~~

—

~~(v)~~

~~Consolidating and eliminating entries representing adjustments to:~~

a.Cost of providing services

~~eliminate intercompany transactions between or among us, the Subsidiary Guarantors and the Subsidiary Non-Guarantors; and~~

~~eliminate the investments in our subsidiaries;~~


~~(vi)~~	Us
Advertising		—
Non-advertising costs of providing services		—
Total cost of providing services		—
Gross margin		—

Operating expense (income)
Corporate, district and ~~our subsidiaries~~other expenses		—
Interest income		—


Gain on ~~a consolidated basis.~~disposition		(1,714)
Total operating income		(1,714)
Pre-tax income from operations of discontinued operations		1,714

Income tax expense related to disposition		429
Net income from discontinued operations		$	1,285

105

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~– UNAUDITED~~ (continued)

~~Condensed Consolidating Balance Sheets~~

December 31, 2017
(dollars in thousands) CFTC CURO Intermediate
Subsidiary
Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations Consolidated CURO Eliminations CURO
Consolidated
Assets:
Cash $ —
$ —
$ 117,379
$ 44,915
$ —
$ —
$ 162,294
$ 80
$ —
$ 162,374
Restricted cash —
—
1,677
3,569
6,871
—
12,117
—
—
$ 12,117
Loans receivable, net —
—
84,912
110,651
167,706
—
363,269
—
—
$ 363,269
Deferred income taxes —
2,154
(4,646 ) 3,502
—
—
1,010
(238 ) —
$ 772
Income taxes receivable —
—
—
—
—
—
—
3,455
—
$ 3,455
Prepaid expenses and other —
—
38,277
3,353
—
—
41,630
882
—
$ 42,512
Property and equipment, net —
—
52,627
34,459
—
—
87,086
—
—
$ 87,086
Goodwill —
—
91,131
54,476
—
—
145,607
—
—
$ 145,607
Other intangibles, net 16
—
5,418
27,335
—
—
32,769
—
—
$ 32,769
Intercompany receivable —
37,877
33,062
(30,588 ) —
(40,351 ) —
—
—
$ —
Investment in subsidiaries (14,504 ) 899,371
—
—
—
(884,867 ) —
(84,889 ) 84,889
$ —
Other 5,713
—
3,017
1,040
—
—
9,770
—
—
$ 9,770
Total assets $ (8,775 ) $ 939,402
$ 422,854
$ 252,712
$ 174,577
$ (925,218 ) $ 855,552
$ (80,710 ) $ 84,889
$ 859,731
Liabilities and Stockholders' equity:
Accounts payable and accrued liabilities $ 2,606
$ 13
$ 35,753
$ 15,954
$ 12
$ —
$ 54,338
$ 1,454
$ —
$ 55,792
Deferred revenue —
—
6,529
5,455
—
—
11,984
—
—
11,984
Income taxes payable (49,738 ) 70,231
(18,450 ) 2,077
—
—
4,120
—
—
4,120
Accrued interest 24,201
—
—
—
1,266
—
25,467
—
—
25,467
Payable to CURO 184,348
—
(95,048 ) —
—
—
89,300
(89,300 ) —
—
CSO guarantee liability —
—
17,795
—
—
—
17,795
—
—
17,795
Deferred rent —
—
9,896
1,681
—
—
11,577
—
—
11,577
Long-term debt (excluding current maturities) 585,823
—
—
—
120,402
—
706,225
—
—
706,225
Subordinated shareholder debt —
—
—
2,381
—
—
2,381
—
—
2,381
Intercompany payable (668,536 ) 876,869
(124,332 ) 40,351
(84,001 ) (40,351 ) —
—
—
—
Other long-term liabilities —
—
3,969
1,799
—
—
5,768
—
—
5,768
Deferred tax liabilities (2,590 ) 6,793
(143 ) 7,426
—
—
11,486
—
—
11,486
Total liabilities 76,114
953,906
(164,031 ) 77,124
37,679
(40,351 ) 940,441
(87,846 ) —
852,595
Stockholders' equity (84,889 ) (14,504 ) 586,885
175,588
136,898
(884,867 ) (84,889 ) 7,136
84,889
7,136
Total liabilities and stockholders' equity $ (8,775 ) $ 939,402
$ 422,854
$ 252,712
$ 174,577
$ (925,218 ) $ 855,552
$ (80,710 ) $ 84,889
$ 859,731

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)~~

December 31, 2016
(dollars in thousands) CFTC CURO Intermediate Subsidiary
Guarantors Subsidiary
Non-Guarantors SPV Subs Eliminations Consolidated CURO Eliminations CURO
Consolidated
Assets:
Cash $ —
$ 1,954
$ 127,712
$ 63,779
$ —
$ —
$ 193,445
$ 80
$ —
$ 193,525
Restricted cash —
459
1,223
3,376
2,770
—
7,828
—
—
7,828
Loans receivable, net —
—
67,558
71,381
108,065
—
247,004
—
—
247,004
Deferred income taxes 2,833
8,802
2,925
2,768
—
(4,693 ) 12,635
—
—
12,635
Income taxes receivable 34,667
—
—
6,151
—
(37,710 ) 3,108
6,270
—
9,378
Prepaid expenses and other —
—
32,964
4,205
—
—
37,169
4,735
(2,656 ) 39,248
Property and equipment, net —
—
58,733
37,163
—
—
95,896
—
—
95,896
Goodwill —
—
91,131
50,423
—
—
141,554
—
—
141,554
Other intangibles, net 19
—
5,616
25,266
—
—
30,901
—
—
30,901
Intercompany receivable —
55,444
383,887
—
—
(439,331 ) —
—
—
—
Investment in subsidiaries 187,473
830,443
—
—
—
(1,017,916 ) —
155,964
(155,964 ) —
Other —
1,745
1,084
—
—
2,829

—
2,829
Total assets $ 224,992
$ 897,102
$ 773,494
$ 265,596
$ 110,835
$ (1,499,650 ) $ 772,369
$ 167,049
$ (158,620 ) $ 780,798
Liabilities and Stockholders' equity:
Accounts payable and accrued liabilities $ 253
$ 3
$ 32,528
$ 9,900
$ —
$ —
$ 42,684
$ (21 ) $ —
$ 42,663
Deferred revenue —
—
6,520
5,822
—
—
12,342

—
12,342
Income taxes payable —
23,087
12,952
3,043
—
(37,710 ) 1,372

—
1,372
Current maturities of long-term debt —
23,406
—
—
—
—
23,406
124,365
—
147,771
Accrued interest —
5,575
—
—
775
—
6,350
1,833
—
8,183
Payable to CURO 2,656
—
—
—
—
—
2,656

(2,656 ) —
CSO guarantee liability —
—
17,052
—
—
—
17,052

—
17,052
Deferred rent —
—
10,006
1,862
—
—
11,868

—
11,868
Long-term debt (excluding current maturities) —
414,082
—
—
63,054
—
477,136

—
477,136
Subordinated shareholder debt —
—
—
2,227
—
—
2,227

—
2,227
Intercompany payable 65,822
233,537
—
85,346
54,626
(439,331 ) —

—
—
Other long-term liabilities 299
—
1,741
2,976
—
—
5,016

—
5,016
Deferred tax liabilities (2 ) 9,914
2,495
6,582
—
(4,693 ) 14,296
17
—
14,313
Total liabilities 69,028
709,604
83,294
117,758
118,455
(481,734 ) 616,405
126,194
(2,656 ) 739,943
Stockholders' equity 155,964
187,498
690,200
147,838
(7,620 ) (1,017,916 ) 155,964
40,855
(155,964 ) 40,855
Total liabilities and stockholders' equity $ 224,992
$ 897,102
$ 773,494
$ 265,596
$ 110,835
$ (1,499,650 ) $ 772,369
$ 167,049
$ (158,620 ) $ 780,798

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)~~

~~Condensed Consolidating~~For the years ended December 31, 2022 and 2021, the Consolidated Statements of ~~Income~~Operations were not impacted by the U.K. Subsidiaries as there was no activity during those periods.

As of December 31, 2022 and 2021, the Consolidated Balance Sheets were not impacted by the U.K. Subsidiaries as all balances were written off when the U.K. segment entered into administration during the first quarter of 2019.

Year Ended December 31, 2017
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations
CFTC
Consolidated
CURO Eliminations CURO
Consolidated
Revenue $ —
$ —
$ 465,170
$ 225,904
$ 272,559
$ —
$ 963,633
$ —
$ —
$ 963,633
Provision for losses —
—
164,068
58,735
103,423
—
326,226
—
—
326,226
Net revenue —
—
301,102
167,169
169,136
—
637,407
—
—
637,407
Cost of providing services:
Salaries and benefits —
—
69,927
35,269
—
—
105,196
—
—
105,196
Occupancy —
—
31,393
23,219
—
—
54,612
—
—
54,612
Office —
—
16,884
4,518
—
—
21,402
—
—
21,402
Other store operating expenses —
—
48,163
6,231
508
—
54,902
—
—
54,902
Advertising —
—
36,148
15,910
—
—
52,058
—
—
52,058
Total cost of providing services —
—
202,515
85,147
508
—
288,170
—
—
288,170
Gross Margin —
—
98,587
82,022
168,628
—
349,237
—
—
349,237
Operating (income) expense:
Corporate, district and other 7,549
(25 ) 108,901
34,170
451
—
151,046
3,927
—
154,973
Intercompany management fee —
—
(23,741 ) 13,970
9,771
—
—
—
—
—
Interest expense 55,809
9,613
(124 ) 189
13,887
—
79,374
3,310
—
82,684
Loss on extinguishment of debt —
11,884
—
—
—
—
11,884
574
—
12,458
Restructuring costs —
—
—
7,393
—
—
7,393
—
—
7,393
Intercompany interest (income) expense —
(4,216 ) (678 ) 4,894
—
—
—
—
—
—
Total operating expense 63,358
17,256
84,358
60,616
24,109
—
249,697
7,811
—
257,508
Net income (loss) before income taxes (63,358 ) (17,256 ) 14,229
21,406
144,519
—
99,540
(7,811 ) —
91,729
Provision for income tax expense (benefit) (24,077 ) 73,218
(13,752 ) 10,372
—
—
45,761
(3,185 ) —
42,576
Net income (loss) (39,281 ) (90,474 ) 27,981
11,034
144,519
—
53,779
(4,626 ) —
49,153
Equity in net income (loss) of subsidiaries:
CFTC —
—
—
—
—
—
—
53,779
(53,779 ) —
CURO Intermediate (90,474 ) —
—
—
—
90,474
—
—
—
—
Guarantor Subsidiaries 27,981
—
—
—
—
(27,981 ) —
—
—
—
Non-Guarantor Subsidiaries 11,034
—
—
—
—
(11,034 ) —
—
—
—
SPV Subs 144,519
—
—
—
—
(144,519 ) —
—
—
—
Net income (loss) attributable to CURO $ 53,779
$ (90,474 ) $ 27,981
$ 11,034
$ 144,519
$ (93,060 ) $ 53,779
$ 49,153
$ (53,779 ) $ 49,153

The following table presents cash flows of the U.K. Subsidiaries (in thousands):

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~



	2020
Net cash provided by discontinued operating activities	$	1,714
Net cash used in discontinued investing activities	—
Net cash used in discontinued financing activities	—

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)~~

Year Ended December 31, 2016
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations
CFTC
Consolidated
CURO Eliminations CURO
Consolidated
Revenue $ —
$ —
$ 581,820
$ 221,799
$ 24,977
$ —
$ 828,596
$ —
$ —
$ 828,596
Provision for losses —
—
176,546
50,540
31,203
—
258,289
—
—
258,289
Net revenue —
—
405,274
171,259
(6,226 ) —
570,307
—
—
570,307
Cost of providing services:
Salaries and benefits —
—
69,549
34,992
—
—
104,541
—
—
104,541
Occupancy —
—
31,451
23,058
—
—
54,509
—
—
54,509
Office —
—
15,883
4,580
—
—
20,463
—
—
20,463
Other store operating expenses —
—
47,491
6,120
6
—
53,617
—
—
53,617
Advertising —
—
30,340
13,581
—
—
43,921
—
—
43,921
Total cost of providing services —
—
194,714
82,331
6
—
277,051
—
—
277,051
Gross Margin —
—
210,560
88,928
(6,232 ) —
293,256
—
—
293,256
Operating (income) expense:
Corporate, district and other 1,898
338
85,452
36,140
—
—
123,828
446
—
124,274
Intercompany management fee —
—
(12,632 ) 12,632
—
—
—

—
Interest expense —
47,684
2
58
864
—
48,608
15,726
—
64,334
Loss on extinguishment of debt —
(4,961 ) (1,319 ) 5,741
539
—
—
—
—
—
Restructuring costs —
(6,991 ) —
—
—
—
(6,991 ) —
—
(6,991 )
Intercompany interest (income) expense —
—
1,726
1,892
—
—
3,618
—
—
3,618
Total operating expense 1,898
36,070
73,229
56,463
1,403
—
169,063
16,172
—
185,235
Net income (loss) before income taxes (1,898 ) (36,070 ) 137,331
32,465
(7,635 ) —
124,193
(16,172 ) —
108,021
Provision for income tax expense (benefit) (682 ) 22,788
14,543
12,522
—
—
49,171
(6,594 ) —
42,577
Net income (loss) (1,216 ) (58,858 ) 122,788
19,943
(7,635 ) —
75,022
(9,578 ) —
65,444
Equity in net income (loss) of subsidiaries:
CFTC —
—
—
—
—
—
—
75,022
(75,022 ) —
CURO Intermediate (58,858 ) —
—
—
—
58,858
—
—
—
—
Guarantor Subsidiaries 122,788
—
—
—
—
(122,788 ) —
—
—
—
Non-Guarantor Subsidiaries 19,943
—
—
—
—
(19,943 ) —
—
—
—
SPV Subs (7,635 ) —
—
—
—
7,635
—
—
—
—
Net income (loss) attributable to CURO $ 75,022
$ (58,858 ) $ 122,788
$ 19,943
$ (7,635 ) $ (76,238 ) $ 75,022
$ 65,444
$ (75,022 ) $ 65,444

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)~~

Year Ended December 31, 2015
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
Eliminations
CFTC
Consolidated
CURO Eliminations CURO
Consolidated
Revenue $ —
$ —
$ 573,664
$ 239,467
$ —
$ 813,131
$ —
$ —
$ 813,131
Provision for losses —
—
222,868
58,342
—
281,210
—
—
281,210
Net revenue —
—
350,796
181,125
—
531,921
—
—
531,921
Cost of providing services:
Salaries and benefits —
—
68,928
38,131
—
107,059
—
—
107,059
Occupancy —
—
30,504
22,784
—
53,288
—
—
53,288
Office —
—
15,089
4,840
—
19,929
—
—
19,929
Other store operating expenses —
—
41,661
5,719
—
47,380
—
—
47,380
Advertising —
—
42,986
22,678
—
65,664
—
—
65,664
Total cost of providing services —
—
199,168
94,152
—
293,320
—
—
293,320
Gross Margin —
—
151,628
86,973
—
238,601
—
—
238,601
Operating (income) expense:
Corporate, district and other 2,035
178
79,155
48,017
—
129,385
1,149
—
130,534
Intercompany management fee —
1
(13,064 ) 13,063
—
—
—
—
—
Interest expense —
49,167
17
111
—
49,295
15,725
—
65,020
Intercompany interest (income) expense —
(5,583 ) (265 ) 5,848
—
—
—
—
—
Goodwill and intangible asset impairment charges —
—
—
2,882
—
2,882
—
—
2,882
Restructuring costs —
—
—
4,291
—
4,291
—
—
4,291
Total operating expense 2,035
43,763
65,843
74,212
—
185,853
16,874
—
202,727
Net income (loss) before income taxes (2,035 ) (43,763 ) 85,785
12,761
—
52,748
(16,874 ) —
35,874
Provision for income tax (benefit) expense (673 ) 10,704
4,164
10,291
—
24,486
(6,381 ) —
18,105
Net income (loss) (1,362 ) (54,467 ) 81,621
2,470
—
28,262
(10,493 ) —
17,769
Equity in net income (loss) of subsidiaries:
CFTC —
—
—
—
—
—
28,262
(28,262 ) —
CURO Intermediate (54,467 ) —
—
—
54,467
—
—
—
—
Guarantor Subsidiaries 81,621
—
—
—
(81,621 ) —
—
—
—
Non-Guarantor Subsidiaries 2,470
—
—
—
(2,470 ) —
—
—
—
Net income (loss) attributable to CURO $ 28,262
$ (54,467 ) $ 81,621
$ 2,470
$ (29,624 ) $ 28,262
$ 17,769
$ (28,262 ) $ 17,769

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)~~

~~Condensed Consolidating~~For the years ended December 31, 2022 and 2021, the Consolidated Statements of Cash Flows were not impacted by the U.K. Subsidiaries as there was no activity during those periods.

NOTE 23 – SHARE REPURCHASE PROGRAM

Year Ended December 31, 2017
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations CFTC
Consolidated CURO Eliminations CURO Consolidated
Cash flows from operating activities:

Net cash provided (used) $ (264,670 ) $ 447,027
$ (2,472 ) $ (20,583 ) $ (52,178 ) $ (3,514 ) 103,610
(86,200 )

17,410
Cash flows from investing activities:

Purchase of property, equipment and software —
—
(7,406 ) (2,351 ) —
—
(9,757 ) —
—
(9,757 )
Cash paid for Zibby Investment (5,600 ) —
—
—
—
—
(5,600 ) —
—
(5,600 )
Change in restricted cash —
459
(454 ) 121
(4,101 ) —
(3,975 ) —
—
(3,975 )
Net cash provided (used) (5,600 ) 459
(7,860 ) (2,230 ) (4,101 ) —
(19,332 ) —
—
(19,332 )
Cash flows from financing activities:

Proceeds from Non-Recourse U.S. SPV facility and ABL facility —
1,590
—
—
58,540
—
60,130
—
—
60,130
Payments on Non-Recourse U.S. SPV facility and ABL facility —
(24,996 ) —
—
(2,261 ) —
(27,257 ) —
—
(27,257 )
Proceeds from issuance of 12.00% Senior Secured Notes 601,054
—
—
—
—
—
601,054
—
—
601,054
Proceeds from revolving credit facilities 35,000
—
—
8,084
—
—
43,084
—
—
43,084
Payments on revolving credit facilities (35,000 ) —
—
(8,084 ) —
—
(43,084 ) —
—
(43,084 )
Payments on 10.75% Senior Secured Notes —
(426,034 ) —
—
—
—
(426,034 ) —
—
(426,034 )
Dividends (paid) received to/from CURO Group Holdings Corp. (312,083 ) —
—
—
—
—
(312,083 ) 312,083
—
—
Payments on Cash Pay Senior Notes —
—
—
—
—
—
—
(125,000 ) —
(125,000 )
Dividends paid to stockholders —
—
—
—
—
—
—
(182,000 ) —
(182,000 )
Proceeds from issuance of common stock —
—
—
—
—
—
—
81,117
—
81,117
Debt issuance costs paid (18,701 ) —
—
—
—
—
(18,701 ) —
—
(18,701 )
Net cash provided (used) 270,270
(449,440 ) —
—
56,279
—
(122,891 ) 86,200
—
(36,691 )
Effect of exchange rate changes on cash —
—
—
3,948
—
3,514
7,462
—
—
7,462
Net increase (decrease) in cash —
(1,954 ) (10,332 ) (18,865 ) —
—
(31,151 ) —
—
(31,151 )
Cash at beginning of period —
1,954
127,712
63,779
—
—
193,445
80
193,525
Cash at end of period $ —
$ —
$ 117,380
$ 44,914
$ —
$ —
$ 162,294
$ 80
$ —
$ 162,374

In February 2022, the Company's Board of Directors authorized a new share repurchase program for the repurchase of up to $25.0 million of CURO common stock. There were no repurchases under this program as of December 31, 2022. Repurchases are at the Company's discretion and can continue until completed or terminated. The Company expects any repurchases to be made from time-to-time in the open market and/or in privately negotiated transactions at the Company's discretion, subject to market conditions and other factors. Any repurchased shares will be available for use in connection with equity plans and for other corporate purposes.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~In May 2021, the Company's Board of Directors authorized a share repurchase program for up to $50.0 million of its common stock. The program commenced in June 2021 and was completed in February 2022. The table below summarizes share repurchase activity in the $50.0 million repurchase program during the years ended December 31, 2022 and December 31, 2021 (in thousands, except for per share amounts and number of share amounts):

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)~~


	For the Year Ended December 31, 2022		For the Year Ended December 31, 2021
Total number of shares repurchased	824,477		2,218,333
Average price paid per share	$	15.20	$	16.86
Total value of shares repurchased	$	12,530	$	37,400

In November 2021, the Company entered into a Share Repurchase Agreement with the Leah M. Faulkner 2017 Dynasty Trust ("Seller"), a Trust advised by a Director and greater than 10% owner of the Company. Pursuant to the Share Repurchase Agreement, the Company repurchased 500,000 shares of its common stock, par value $0.001 per share, owned by the Seller, in a private transaction at a purchase price equal to $18.10 per share of common stock. This transaction occurred outside of the share repurchase program authorized in May 2021.

In February 2020, the Company's Board of Directors authorized a share repurchase program for up to $25.0 million of its common stock. Due to uncertainty caused by COVID-19, the Board terminated the program on March 15, 2020. There were no material purchases under the program during the year ended December 31, 2020.

Year Ended December 31, 2016
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations
CFTC
Consolidated
CURO Eliminations CURO
Consolidated
Cash flows from operating activities:
Net cash provided (used) $ 20
$ 29,400
$ 76,191
$ 27,731
$ (83,601 ) $ (627 ) 49,114
(1,402 ) —
47,712
Cash flows from investing activities:
Purchase of property, equipment and software (20 ) —
(10,105 ) (5,901 ) —
—
(16,026 ) —
—
(16,026 )
Change in restricted cash —
(459 ) 4,477
1,856
(2,770 ) —
3,104
—
—
3,104
Net cash used (20 ) (459 ) (5,628 ) (4,045 ) (2,770 ) —
(12,922 ) —
—
(12,922 )
Cash flows from financing activities:
Proceeds from credit facility —
30,000
—
—
—
—
30,000
—
—
30,000
Payments on credit facility —
(38,050 ) —
—
—
—
(38,050 ) —
—
(38,050 )
Deferred financing costs —
—
—
—
(5,346 ) —
(5,346 ) —
—
(5,346 )
Proceeds from Non-Recourse U.S. SPV Facility and ABL facility —
—
—
—
91,717
—
91,717
—
—
91,717
Purchase of May 2011 Senior Secured notes —
(18,939 ) —
—
—
—
(18,939 ) —
—
(18,939 )
Net cash provided (used) —
(26,989 ) —
—
86,371
—
59,382
—
—
59,382
Effect of exchange rate changes on cash —
—
—
(1,835 ) —
627
(1,208 ) —
—
(1,208 )
Net increase in cash —
1,952
70,563
21,851
—
—
94,366
(1,402 ) —
92,964
Cash at beginning of period —
2
57,149
41,928
—
—
99,079
1,482
—
100,561
Cash at end of period $ —
$ 1,954
$ 127,712
$ 63,779
$ —
$ —
$ 193,445
$ 80
$ —
$ 193,525

Year Ended December 31, 2015
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
Eliminations
CFTC
Consolidated
CURO Eliminations CURO
Consolidated
Cash flows from operating activities:
Net cash provided (used) $ —
$ 11,950
$ 27,698
$ (6,345 ) $ 1,048
34,351
(17,237 ) —
17,114
Cash flows from investing activities:
Purchase of property, equipment and software —
—
(8,642 ) (11,190 ) —
(19,832 ) —
—
(19,832 )
Intercompany dividends 18,471
—
(18,471 ) —
—
—
—

Change in restricted cash —
—
(300 ) (6,123 ) —
(6,423 ) —
—
(6,423 )
Net cash provided (used) 18,471
—
(27,413 ) (17,313 ) —
(26,255 ) —
—
(26,255 )
Cash flows from financing activities:
Proceeds from credit facility —
57,050
—
—
—
57,050
—
—
57,050
Payments on credit facility —
(69,000 ) —
—
—
(69,000 ) —
—
(69,000 )
Dividend paid to CGHC (18,100 ) —
—
—
—
(18,100 ) 18,100
—
—
Cash settlement of equity award (371 ) —
—
—
—
(371 ) —
—
(371 )
Net cash provided (used) (18,471 ) (11,950 ) —
—
—
(30,421 ) 18,100
—
(12,321 )
Effect of exchange rate changes on cash —
—
—
(7,016 ) (1,048 ) (8,064 ) —
—
(8,064 )
Net increase in cash —
—
285
(30,674 ) —
(30,389 ) 863
—
(29,526 )
Cash at beginning of period —
2
56,864
72,602
—
129,468
619
—
130,087
Cash at end of period $ —
$ 2
$ 57,149
$ 41,928
$ —
$ 99,079
$ 1,482
$ —
$ 100,561

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)~~

NOTE ~~25 -~~24 – SUBSEQUENT EVENTS

~~The Company evaluated subsequent events and determined there has been no material subsequent events that require recognition or disclosure in the consolidated financial statements, except as follows:~~

Curo Canada Revolving Credit Facility

On January 6, 2023, the C$5 2018, the underwriters of our initial public offering exercised their option to purchase up to an additional 1,000,000 shares at the initial public offering price, less the underwriting discount to cover over-allotments. As a result of the closing ofmillion Curo Canada Revolving Credit Facility was cancelled in its initial public offering and the exercise of the option, we have issued a total of 7,666,667 shares of common stock at a price of $14.00 per share. Our net proceeds from the offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by CURO, are approximately $95.3 million.entirety.

106

On February 5, 2018 CURO Financial Technologies Corp. (“CFTC”), a wholly-owned subsidiary of the Company, issued a notice of redemption for $77,500,000 of its 12.00% Senior Secured Notes due 2022 (the “Notes,” and the transaction whereby the Notes are partially redeemed, the “Redemption”) that were issued by CFTC. The redemption was completed on March 7, 2018. The redemption price was equal to 112.00% of the principal amount of the Notes redeemed, plus accrued and unpaid interest paid thereon, to the date of redemption. Following the Redemption, $527,500,000 of the original outstanding principal amount of the Notes remain outstanding. The Redemption was conducted pursuant to the Indenture governing the Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the Indenture, CFTC used a portion of the cash proceeds from the Company’s initial public offering, completed on December 11, 2017, to redeem such Notes.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Ad Astra — Ceased Operations

We utilized Ad Astra as our debt collector for delinquent loans originated by Legacy U.S. Direct Lending Business. Loans were typically assigned to Ad Astra after 91 days without a scheduled payment. Upon the sale of the Legacy U.S. Direct Lending Business in July 2022, Ad Astra continued to service these loans as part of the Transition Services Agreement with Community Choice Financial. In January 2023, the Company ceased Ad Astra's operations.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

~~None.~~

ITEM 9A. CONTROLS AND PROCEDURES

~~Under~~Evaluation of Disclosure Controls and Procedures

Prior to the filing of this Form 10-K and under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, ~~our management has evaluated~~we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures ~~(as~~as of the last day of the period covered by this Form 10-K.

Disclosure controls and procedures are defined inby Rules 13a-15(e) and 15d-15(e) ~~under~~of the ~~Securities~~ Exchange Act ~~of 1934, or the “Exchange Act”)~~ as ~~of December 31, 2017 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure~~ controls and other procedures that are ~~effective and provide reasonable assurance (i)~~designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified inby the ~~Securities and Exchange Commission~~SEC's rules and ~~forms;~~forms. Disclosure controls and ~~(ii)~~procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

~~This Annual Report does not include a report~~Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~management’s assessment~~December 31, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time frames specified in the SEC's rules and forms and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding ~~internal control over~~required disclosure.

Inherent Limitations of the Effectiveness of Internal Control

Our ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting ~~or an attestation report~~and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our ICFR includes those policies and procedures that:

(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our ~~registered public accounting firm due~~assets;

(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a ~~transition period established by rules of~~material effect on the ~~Securities and Exchange Commission for newly public companies.~~financial statements.

~~Our management,~~Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our ~~disclosure controls and procedures or~~ internal controls will prevent or detect all ~~possible misstatements due~~errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to ~~error or fraud. Our disclosure controls and procedures and~~their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are ~~however,~~subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate ICFR. Our internal control system was designed to provide reasonable assurance to our management and Board of ~~achieving their objectives,~~Directors regarding the preparation and fair presentation of our published financial statements.

107

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Prior to the filing of this Form 10-K, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, ~~have~~assessed the effectiveness of our ICFR, excluding the operations of First Heritage as noted below, as of the last day of the period covered by the report. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in the Internal Control-Integrated Framework (“2013 Framework”). Based on our Evaluation under the 2013 Framework, our management concluded that our ICFR was effective as of December 31, 2022. Deloitte & Touche LLP has audited the Consolidated Financial Statements included in this Form 10-K and, as part of its audit, has issued an attestation report, included herein, on the effectiveness of our ICFR.

In conducting the evaluation of effectiveness of its internal control over financial reporting as of December 31, 2022, we excluded the operations of First Heritage as permitted by the guidance issued by the Office of the Chief Accountant of the SEC (provided that the period of such exclusion does not extend more than one year beyond the date of acquisition or for more than one annual reporting period). In conducting the evaluation of the effectiveness of its disclosure on controls and procedures as of December 31, 2022, we excluded those disclosure controls and procedures of First Heritage that are ~~effective at~~subsumed by our ICFR. The First Heritage acquisition was completed on July 13, 2022. As of and for the year ended December 31, 2022, First Heritage's tangible assets represented approximately 9.0% of our consolidated assets and 5.3% of our consolidated revenues. See Note 1 4 , "Acquisitions and Divestiture" for additional information on the First Heritage acquisition and the impact on our consolidated financial statements.

Changes in Internal Control over Financial Reporting

We are working to integrate First Heritage into our overall internal control over financial reporting processes. Except for changes made in connection with the integration of First Heritage, there were no changes in our ICFR (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the year ended December 31, 2022, that ~~reasonable assurance level.~~have materially affected, or are reasonably likely to materially affect, our ICFR.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

PART ~~III~~III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

~~Incorporated~~The information called for by this Item 10 is incorporated by reference to the sections entitled ~~"Structure and Functioning~~"Election of ~~the Board", "Directors to be Elected by our Stockholders",~~Directors," "Executive Officers," "Corporate Governance," "Certain Relationships and Related Transactions" and ~~"Section~~"Delinquent Section 16(a) ~~Beneficial Ownership Reporting Compliance"~~Reports" of our Proxy Statement for ~~our 2018~~the Annual Meeting of ~~Shareholders~~Stockholders to be ~~filed~~held on June 14, 2023. We intend to file such Proxy Statement with the Securities and Exchange Commission within 120 days after the ~~close~~end of the fiscal year ~~ended December 31, 2017.~~covered by this Form 10-K.

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including our principal executive, principal financial and principal accounting officers, or persons performing similar functions. Our Code of Business Conduct and Ethics is posted on our website located at https://www.ir.curo.com/corporate-governance/governance-documents. We intend to disclose future amendments to certain provisions of the Code of Business Conduct and Ethics, and waivers of the Code of Business Conduct and Ethics granted to executive officers and directors, on the website within four business days following the date of the amendment or waiver.

ITEM 11. EXECUTIVE COMPENSATION

~~Incorporated~~The information called for by this Item 11 is incorporated by reference to the sections entitled "Non-Employee Director Compensation" and "Executive Compensation"~~, "Director Compensation", "Security Ownership of Certain Beneficial Owners and Management" and "Structure and Functioning of the Board—Compensation Committee"~~ of our Proxy Statement ~~for our 2018 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the close of the year ended December 31, 2017.~~referenced above in Item 10.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

~~Incorporated~~The information called for by this Item 12 is incorporated by reference to the sections entitled "Security Ownership ~~and~~of Certain Beneficial Owners and Management" and ~~"Section 16(A) Beneficial Ownership Reporting Compliance"~~"Equity Compensation Plan for Information" of our Proxy Statement ~~for our 2018 Annual Meeting~~referenced above in Item 10.

Equity Compensation Plan Information

The following table provides information about the Company's equity compensation plans as of ~~Shareholders to be filed with the Securities and Exchange Commission within 120 days after the close of the year ended~~ December 31, ~~2017.~~2022:

108

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options (a)(1)	Weighted Average Exercise Price of Outstanding Options (b)(2)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column(a)) (c)(3)
Equity compensation plans approved by security holders	4,484,009	$	4.83	2,967,721
Equity compensation plans not approved by security holders	—	—		—
Total	4,484,009	$	4.83	2,967,721
(1)This amount includes 515,088 shares of common stock to be issued for stock options and 3,824,431 shares of common stock to be issued upon the vesting of RSU's.
(2) This amount represents only the stock options outstanding as of December 31, 2022, since RSU awards do not have an exercise price.
(3) This amount represents securities issuable under the 2017 Incentive Plan which is comprised of only RSU's as of December 31, 2022.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

~~Incorporated~~The information called for by this Item 13 is incorporated by reference to the ~~sections~~section entitled "Certain Relationships and Related Transactions" of our Proxy Statement ~~for our 2018 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the close of the year ended December 31, 2017.~~referenced above in Item 10.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

~~Incorporated~~Our independent registered public accounting firm is Deloitte & Touche LLP; Chicago, IL; Firm ID: 34

The information called for by this Item 14 is incorporated by reference to the ~~sections~~section entitled ~~"Structure and Functioning~~"Ratification of ~~the Board—Audit Committee" and "Proposal 2 - Ratification of the~~ Appointment of Independent Registered Public Accounting ~~Firm—Audit and Non-Audit Fees"~~Firm" of our Proxy Statement ~~for our 2018 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the close of the year ended December 31, 2017.~~referenced above in Item 10.

PART IVIV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) List of documents filed as part of this report

109


(1)		Consolidated Financial Statements

~~(1)~~		~~Consolidated Financial Statements~~

	The consolidated financial statements and related notes, together with the ~~report~~reports of ~~Grant Thornton~~Deloitte & Touche LLP, appear in Part II, Item ~~8, Financial~~8. "Financial Statements and Supplementary ~~Data,~~Data" of this ~~Form 10-K.~~ Report. The consolidated financial statements consist of the following:

		Consolidated Balance Sheets as of December 31, ~~2017~~2022 and ~~2016~~2021

		Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020

		Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020

		~~Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015~~

	Consolidated Statements of Changes in Equity for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020

		Consolidated Statements of Cash Flows for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020

		Notes to Consolidated Financial Statements

(2)		Consolidated Financial Statement Schedules

		All schedules have been omitted because they are not applicable, are insignificant or the required information is shown in the consolidated financial statements or notes thereto.

(3)		Exhibits

		The exhibits are listed on the Exhibit Index.

ITEM 16. FORM 10-K SUMMARY

~~None~~None.

110

CURO Group Holdings Corp.

Form 10-K Annual Report

for the Period Ended

December 31, ~~2017~~20222

Exhibit Index

Exhibit

Description

Filed/Incorporated by Reference from Form

Incorporated by Reference from Exhibit Number

Filing Date

2.1

Arrangement Agreement dated January 28, 2021 among CURO Group Holdings Corp., CURO Intermediate Holdings Corp., certain identified persons, FLX Holding Corporation, Flexiti Financial Inc. and Shareholder Representative Services LLC, solely in its representative capacity¥

10-K

2.1

3/5/21

2.2

Stock Purchase Agreement, dated as of November 17, 2021, among CURO Group Holdings Corp., Curo Intermediate Holdings Corp., SouthernCo, Inc., a Delaware corporation d/b/a Heights Finance, and SouthernCo Holdings, LLC*

8-K

2.1

11/19/21

2.3

Equity Asset Purchase Agreement, dated as of May 18, 2022, among CURO Intermediate Holdings Corp., Sparrow Purchaser, LLC and CCF Intermediate Holdings LLC*

8-K

2.1

5/19/22

2.4

Amendment Agreement to the Equity and Asset Purchase Agreement, dated as of July 8, 2022, among CURO Intermediate Holdings Corp., Sparrow Purchase, LLC and CCF Intermediate Holdings LLC

8-K

2.2

7/14/22

2.5

Agreement and Plan of Merger, dated as of May 18, 2022, among CURO Group Holdings Corp,. Sugarcane Sub, LLC, First Heritage Credit, LLC and Ernest L. Coward, Jr., solely in his capacity as Member Representative*

8-K

2.2

5/19/22

2.6

First Amendment to Agreement and Plan of Merger, dated as of July 13, 2022, among CURO Group Holdings Corp., Sugarcane Sub, LLC and First Heritage Credit, LLC

8-K

2.4

7/14/22

3.1

Amended and Restated Certificate of Incorporation

10-Q

10.1

8/5/20

3.2

Amended and Restated Bylaws

8-K

3.2

12/11/17

4.1

Form of common stock certificate

S-1

4.1

11/28/17

4.2

Amended and Restated Investors Rights Agreement between the Company and the investors listed on the signature pages thereto

S-1

4.2

11/28/17

4.3

Amendment to Amended and Restated Investors Rights Agreement, dated May 14, 2018, between the Company and the investors listed on the signature pages thereto

S-1

4.3

5/14/18

4.4

Indenture, dated as of July 30, 2021, by and among CURO Group Holdings Corp., the guarantors party thereto and TMI Trust Company, as trustee and collateral agent

8-K

4.1

8/3/21

4.5

Indenture, dated December 3, 2021, between CURO Finance, LLC, as issuer, and TMI Trust Company, as trustee and collateral agent

8-K

4.1

12/3/21

4.6

Form of Senior Secured Note (included in Exhibit 4.5)

8-K

4.2

12/3/21

4.7

Supplemental Indenture, dated December 26, 2021, by and between CURO Group Holdings Corp. and TMI Trust Company

8-K

4.1

12/28/21

4.8

Description of the Company's Securities

10-K

4.4

3/9/20

10.1

Second Amended and Restated Credit Agreement made as of November 12, 2021 among CURO Canada Receivables Limited Partnership, as borrower; the lenders party; and Waterfall Asset Management, LLC, as administrative agent¥

10-K

10.6

3/7/22

111



~~Exhibit Number~~		~~Description~~
~~3.1~~		~~Amended and Restated Certificate of Incorporation of the Registrant #~~
~~3.2~~		~~Form of Amended and Restated Bylaws of the Registrant #~~
~~4.1~~		~~Form of common stock certificate #~~
~~4.2~~		~~Form of Amended and Restated Investors Rights Agreement between the Registrant and the investors listed on the signature pages thereto, to be in effect upon the completion of this Offering #~~
~~10.1~~		Loan Agreement, dated November 17, 2016, by and among CURO Receivables Finance I, LLC, the borrowers party thereto, the financial institutions party thereto and Victory Park Management, LLC, as agent # ¥
~~10.2~~		First Amendment to Loan Agreement, dated May 5, 2017, by and among CURO Receivables Finance I, LLC, CURO Receivables Holdings I, LLC, the lenders party thereto and Victory Park Management, LLC, as administrative agent and collateral agent #
~~10.3~~		~~Indenture, dated February 15, 2017, by and between CURO Financial Technologies Corp., the guarantors party thereto and TMI Trust Company, as trustee and collateral agent #~~
~~10.4~~		~~CURO Group Holdings Corp. (f/k/a Speedy Group Holdings Corp.) 2010 Equity Incentive Plan and form of Stock Option Agreement #+~~
~~10.5~~		~~CURO Group Holdings Corp. 2017 Incentive Plan #+~~
~~10.6~~		~~CURO Group Holdings Corp. Employee Stock Purchase Plan #+~~
~~10.7~~		~~CURO Group Holdings Corp. (f/k/a Speedy Group Holdings Corp.) Nonqualified Deferred Compensation Plan, dated June 1, 2015 #+~~
~~10.8~~		~~2016 Annual Corporate Incentive Plan #+~~
~~10.9~~		~~Employment and Non-Competition Agreement, dated January 13, 2012, by and between Donald F. Gayhardt, Jr. and CURO Financial Technologies Corp. (f/k/a Speedy Cash Holdings Corp.) #+~~
~~10.10~~		~~Employment and Non-Competition Agreement, dated January 1, 2017, by and between Donald F. Gayhardt, Jr. and CURO Financial Technologies Corp. #+~~
~~10.11~~		~~Employment and Non-Competition Agreement, dated March 5, 2016, by and between William Baker and CURO Group Holdings Corp. (f/k/a Speedy Group Holdings Corp.) #+~~
~~10.12~~		~~Employment and Non-Competition Agreement, dated April 10, 2017, by and between Terry Pittman and CURO Group Holdings Corp. #+~~
~~10.13~~		~~Form of 2013 Special Bonus Notice #+~~
~~10.14~~		~~Form of 2017 Special Bonus Notice #+~~
~~10.15~~		~~2017 Annual Corporate Incentive Plan #+~~
~~10.16~~		~~Subordinated Note, dated May 12, 2011, issued by Cash Money Cheque Cashing Inc. (as successor by merger to Cash Money Acquisition Inc.) to The J.P. Genova Family Trust #~~
~~10.17~~		~~Commercial Lease Agreement, dated December 22, 2007, by and between CDM Development, LLC and CURO Management LLC (f/k/a Tiger Financial Management, LLC) #~~
~~10.18~~		~~Letter Agreement, dated June 8, 2012, by and between CDM Development, LLC and CURO Management LLC (f/k/a Tiger Financial Management, LLC) #~~
~~10.19~~		~~Sublease Agreement, dated November 16, 2010, by and between The Amigos Rental, LLC (as successor in interest to Dinning-Beard, Inc.) and CURO Management LLC (f/k/a Tiger Financial Management, LLC) #~~
~~10.20~~		~~Letter Agreement, dated June 15, 2015, by and between The Amigos Rental, LLC (as successor in interest to Dinning-Beard, Inc.) and CURO Management LLC (f/k/a Tiger Financial Management, LLC) #~~


10.2	Second Amended and Restated Guaranty dated as of November 12, 2021 among CURO Group Holdings Corp., as guarantor; LendDirect Corp., as seller and servicer; CURO Canada Corp., as seller and servicer; Canada Receivables Limited Partnership, by its general partner, CURO Canada Receivables GP Inc., as borrower; WF Marlie 2018-1, Ltd., as lender; and Waterfall Asset Management , LLC, as administrative agent¥	10-K	10.7	3/7/22
10.3	Sale and Servicing Agreement, dated as of August 2, 2018, among CURO Canada Receivables Limited Partnership, by its General Partner, CURO Canada Receivables GP Inc., Cash Money Cheque Cashing Inc. and LendDirect Corp.	8-K	10.3	8/6/18
10.4	General Security Agreement, dated as of August 2, 2018, among CURO Canada Receivables Limited Partnership, by its General Partner, CURO Canada Receivables GP Inc. and Waterfall Asset Management, LLC	8-K	10.4	8/6/18
10.5	Revolving Loan Agreement, dated September 1, 2017, by and among CURO Intermediate Holdings Corp., CURO Financial Technologies Corp., and certain of its subsidiaries, the lenders party thereto and Bay Coast Bank, as administrative agent, collateral agent and issuing bank	S-1	10.53	10/24/17
10.6	First Amendment to Revolving Loan Agreement dated as of February 26, 2018, by and among CURO Financial Technologies Corp., CURO Intermediate Holdings Corp., the guarantors party to the loan agreement and Bay Coast Bank, as administrative agent	10-Q	10.69	5/3/18
10.7	Second Amendment to Revolving Loan Agreement, dated as of August 27, 2018, by and among Curo Financial Technologies Corp., CURO Intermediate Holdings Corp., the guarantors party thereto, the lenders party thereto and Bay Coast Bank, as administrative agent	8-K	10.4	8/27/18
10.8	Amendment to Revolving Loan Agreement, dated as of November 9, 2018, among CURO Financial Technologies Corp., CURO Intermediate Holdings Corp., the Guarantors party to the Loan Agreement, each Lender party to the Loan Agreement and Bay Coast Bank, as administrative agent	8-K	10.1	11/13/18
10.9	Fifth Amended and Restated Credit Agreement, dated as of September 29, 2022, among Flexiti Financing SPE Corp.; Flexiti Financial Inc.; various lenders; Credit Suisse AG, New York Branch, as Facility Agent; TSX Trust Company, as Collateral Agent and Verification Agent; and Credit Suisse AG, New York Branch, as Syndication Agent, Documentation Agent and Lead Arranger ¥	10-Q	10.1	11/3/22
10.10	Performance Guarantee and Indemnity Agreement, dated as of March 10, 2021, by CURO Group Holdings Corp. for the benefit of Credit Suisse AG, New York Branch, as Facility Agent; SPF Securitized Products Master Fund Ltd., the Class B Agent; and the lenders party to the Third Amended and Restated Credit Agreement dated as of January 28, 2021¥	10-Q	10.2	5/7/21
10.11	Pledge Agreement, dated as of July 30, 2021, by and among CURO Group Holdings Corp., the guarantors party thereto and TMI Trust Company, as collateral agent	8-K	10.1	8/3/21
10.12	Security Agreement, dated as of July 30, 2021, by and among CURO Group Holdings Corp., the guarantors party thereto and TMI Trust Company, as collateral agent	8-K	10.2	8/3/21
10.13	Intercreditor Agreement, dated as of July 30, 2021, by and among TMI Trust Company, as collateral agent under the Indenture, and the agent for the lenders under the Revolving Loan Agreement	8-K	10.3	8/3/21
10.14	Credit Agreement, dated as of December 31, 2019, among SMC Financing LLC, as Borrower, Southern Management Corporation, in its individual capacity and as Seller and Servicer, and Ares Agent Services, L.P., as Administrative Agent and Collateral Agent and the Lenders party¥	10-K	10.19	3/7/22

112



~~10.21~~		~~Commercial Lease Agreement, dated January 1, 2008, by and between CURO Management LLC (f/k/a Tiger Financial Management, LLC) and CDM Development, LLC #~~
~~10.22~~		~~Amendment to Lease, dated December 1, 2008, by and between CDM Development, LLC and CURO Management LLC (f/k/a Tiger Financial Management, LLC) #~~
~~10.23~~		~~Amendment to Lease, dated August 1, 2009, by and between CDM Development, LLC and CURO Management LLC (f/k/a Tiger Financial Management, LLC) #~~
~~10.24~~		~~Commercial Lease Agreement, dated April 16, 2012, by and between CURO Management LLC (f/k/a Tiger Financial Management, LLC) and Douglas R. Rippel #~~
~~10.25~~		~~Lease Agreement, dated July 31, 2012, by and between MCIB Partners and CURO Management LLC (f/k/a Tiger Financial Management, LLC) #~~
~~10.26~~		~~Commercial Lease Agreement, dated March 29, 2012, by and between CURO Management LLC (f/k/a Tiger Financial Management, LLC) and CDM Development, LLC #~~
~~10.27~~		Short-Term Credit Agreement, dated November 17, 2016, by and among CURO Financial Technologies Corp., CURO Intermediate Holdings Corp., the lenders party thereto and Victory Park Management, LLC, as administrative agent # ¥
~~10.28~~		~~Credit Services Agreement, dated November 3, 2015, by and between NCP Finance Ohio, LLC and SCIL, Inc. #~~
~~10.29~~		~~Purchase Agreement, dated February 1, 2017, by and between CURO Financial Technologies Corp. and Mike McKnight #~~
~~10.30~~		~~Purchase Agreement, dated February 1, 2017, by and between CURO Financial Technologies Corp. and the Douglas R. Rippel Trust #~~
~~10.31~~		~~Form of Director and Officer Indemnification Agreement #+~~
~~10.32~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Cash Colorado, LLC and Ad Astra Recovery Service, Inc. #~~
~~10.33~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Concord Finance, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.34~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Evergreen Financial Investments, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.35~~		~~Collection Agency Agreement, dated November 25, 2014, by and between FMMR Investments, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.36~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Galt Ventures, LLC and Ad Astra Recovery Service, Inc. #~~
~~10.37~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Principal Investments, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.38~~		~~Collection Agency Agreement, dated November 25, 2014, by and between SCIL, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.39~~		~~Collection Agency Agreement, dated November 25, 2014, by and between SCIL Texas, LLC and Ad Astra Recovery Service, Inc. #~~
~~10.40~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Speedy Cash and Ad Astra Recovery Service, Inc. #~~
~~10.41~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Speedy Cash Illinois, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.42~~		~~Collection Agency Agreement, dated November 25, 2014, by and between The Money Store, L.P. and Ad Astra Recovery Service, Inc. #~~
~~10.43~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Todd Car Title, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.44~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Todd Financial, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.45~~		~~Collection Agency Agreement, dated November 25, 2014, by and between A Speedy Cash Car Title Loans, LLC and Ad Astra Recovery Service, Inc. #~~
~~10.46~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Advance Group, Inc. and Ad Astra Recovery Service, Inc. #~~
~~10.47~~		~~Collection Agency Agreement, dated November 25, 2014, by and between Attain Finance, LLC and Ad Astra Recovery Service, Inc. #~~


10.15	Note Purchase Agreement made as of December 9, 2021 between Flexiti Securitization Limited Partnership, as the Issuer; Flexiti Securitization General Partner Inc., as General Partner; National Bank of Canada, as a Class A Noteholder; BNY Trust Company of Canada, in its capacity as trustee of Precision Trust, as a Class A Noteholder; WF Torca, Ltd. as the Class B Noteholder; and National Bank of Canada, as the Structuring Agent¥	10-K	10.20	3/7/22
10.16	Trust Indenture made as of December 9, 2021 between Flexiti Securitization Limited Partnership, Flexiti Securitization General Partner Inc., general partner and as Issuer, and Computershare Trust Company, as indenture trustee¥	10-K	10.21	3/7/22
10.17	Series 2021-1 Supplemental Indenture dated December 9, 2021 between Flexiti Securitization Limited Partnership, by its general partner, Flexiti Securitization General Partner Inc., as Issuer; Flexiti Securitization General Partner Inc., in its own right; Flexiti Financial Inc., as initial Paying Agent; and Computershare Trust Company of Canada, as Indenture Trustee¥	10-K	10.22	3/7/22
10.18	Receivables Sale and Servicing Agreement dated December 9, 2021 between Flexiti Financial Inc., as Seller and Servicer; Flexiti Securitization Limited Partnership, as Purchaser, by its general partner, Flexiti Securitization General Partner Inc.; Flexiti Securitization General Partner Inc., in its own right; and Computershare Trust Company of Canada, as Indenture Trustee¥	10-K	10.23	3/7/22
10.19	Performance Guarantee and Indemnity Agreement dated December 9, 2021 between National Bank of Canada and Precision Trust, as Class A Noteholders; WF Torca, Ltd., as Class B Noteholder; National Bank of Canada, as Structuring Agent; and CURO Group Holdings Corp., as Guarantor¥	10-K	10.24	3/7/22
10.20	Credit Agreement, dated as of July 13, 2022, among First Heritage Financing I, LLC, First Heritage Credit, LLC, the lenders and agents from time to time party thereto, the subservicers party thereto, Computershare Trust Company, National Association, Wilmington Trust, National Association and Credit Suisse AG, New York Branch ¥	8-K	10.1	7/14/22
10.21	Credit Agreement, dated as of July 15, 2022, among Heights Financing I, LLC, SouthernCo, Inc., the lenders and agents from time to time party thereto, the subservicers party thereto, Computershare Trust Company, National Association, Wilmington Trust, National Association and Credit Suisse AG, New York Branch * ¥	8-K	10.1	7/20/22
10.22	Commercial Lease Agreement, dated March 29, 2012, by and between CURO Management LLC (f/k/a Tiger Financial Management, LLC) and CDM Development, LLC	S-1	10.26	10/24/17
10.23	Lease Agreement made and entered into on September 18, 2015 by Wells Hubbard Limited Partnership and Tiger Financial Management LLC	10-K	10.28	3/7/22
10.24	First Amendment to Lease made as of January 27, 2020 by and between Wells Hubbard Limited Partnership and Curo Management LLC (formerly known as Tiger Financial Management LLC)	10-K	10.29	3/7/22
10.25	Merchant Agreement by and between Flexiti Financial Inc. and Leon's Furniture Limited, The Brick Ltd., The Brick Warehouse L.P. and The Brick GP Ltd. as of May 26, 2021	10-Q	10.1	7/28/21
10.26	Warrant Certificate in favor of Leon's Furniture Ltd. effective as of May 26, 2021	10-Q	10.2	7/28/21
10.27	Form of Director and Officer Indemnification Agreement +	S-1	10.31	11/1/17
10.28	CURO Group Holdings Corp. (f/k/a Speedy Group Holdings Corp.) Nonqualified Deferred Compensation Plan, dated June 1, 2015 +	S-1	10.7	10/24/17
10.29	CURO Group Holdings Corp. (f/k/a Speedy Group Holdings Corp.) Form of Participation Agreement to Nonqualified Deferred Compensation Plan +	S-1	10.57	10/24/17

113



~~10.48~~		Guaranty and Security Agreement, dated November 17, 2016, by and between CURO Receivables Finance I, LLC, CURO Receivables Holdings I, LLC, the other parties thereto and Victory Park Management, LLC, as agent #
~~10.49~~		Amended and Restated Intercreditor Agreement, dated November 17, 2016, by and between Victory Park Management LLC, as the first lien agent, and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as the second lien agent #
~~10.50~~		Security Agreement, dated November 17, 2016, by and among CURO Financial Technologies Corp., CURO Intermediate Holdings Corp., and certain of its subsidiaries, the other parties thereto and Victory Park Management, LLC, as collateral agent #
~~10.51~~		Pledge Agreement, dated November 17, 2016, by and among CURO Financial Technologies Corp., CURO Intermediate Holdings Corp., and certain of its subsidiaries, the other parties thereto and Victory Park Management, LLC, as collateral agent #
~~10.52~~		~~Subsidiaries Guaranty, dated November 17, 2016, by and among the guarantors party thereto and Victory Park Management, LLC, as administrative agent #~~
~~10.53~~		Revolving Loan Agreement, dated September 1, 2017, by and among CURO Intermediate Holdings Corp., CURO Financial Technologies Corp., and certain of its subsidiaries, the lenders party thereto and Bay Coast Bank, as administrative agent, collateral agent and issuing bank #
~~10.54~~		Special Limited Agency Agreement, dated as of August 22, 2017, by and between TXCSO, Inc., a Texas corporation (d/b/a Barr Funding Company), SCIL TEXAS, LLC, a Nevada limited liability company, and The Money Store, L.P., a Texas limited partnership #
~~10.55~~		~~Special Limited Agency Agreement, dated as of October 6, 2017, by and between IVY FUNDING EIGHT, LLC, a Texas limited liability company, and SCIL TEXAS, LLC, a Nevada limited liability company #~~
~~10.56~~		Amended and Restated Special Limited Agency Agreement, dated as of September 27, 2017, by and between INTEGRITY TEXAS FUNDING, LP, a Texas limited partnership, and SCIL TEXAS, LLC, a Nevada limited liability company #
~~10.57~~		~~CURO Group Holdings Corp. (f/k/a Speedy Group Holdings Corp.) Form of Participation Agreement to Nonqualified Deferred Compensation Plan #+~~
~~10.58~~		~~Form of 2017 August Special Bonus Notice #+~~
~~10.59~~		~~Form of October 2017 Special Bonus Notice #+~~
~~10.60~~		~~Amendment Number 1 to Donald F. Gayhardt’s Employment and Non-Competition Agreement, dated as of November 8, 2017 #+~~
~~10.61~~		~~Form of Additional Notes Bonus Notice #+~~
~~10.62~~		~~Special Limited Agency Agreement, dated as of November 13, 2017, by and between TXCSO, Inc., a Texas corporation (d/b/a Barr Funding Company), and Avio Credit, Inc., a Delaware corporation. #~~
~~10.63~~		~~2018 Corporate Incentive Compensation Program *+~~
~~10.64~~		~~2018 Long-Term Incentive Program Award Communication *+~~
~~10.65~~		~~CURO Group Holdings Corp. 2017 Incentive Plan Form of Restricted Stock Unit Notice and Agreement (Non-Employee Directors) *+~~
~~10.66~~		~~CURO Group Holdings Corp. 2017 Incentive Plan Form of Restricted Stock Unit Notice and Agreement *+~~
~~10.67~~		~~Notice and Acknowledgement of Acceleration of 2017 Special Bonus Payments *+~~
~~10.68~~		~~CURO Group Holdings Corp. 2017 Incentive Plan Sub-Plan for UK Employees *+~~
~~21.1~~		~~List of Subsidiaries #~~
~~31.1~~		Certifications of Chief Executive Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
~~31.2~~		Certifications of Chief Financial Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
~~32.1~~		Certifications of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended. **
~~32.2~~		Certifications of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended. **

10.30

CURO Group Holdings Corp. Employee Stock Purchase Plan +

S-1

10.6

11/28/17

10.31

CURO Group Holdings Corp. (f/k/a Speedy Group Holdings Corp.) 2010 Equity Incentive Plan and form of Stock Option Agreement +

S-1

10.4

11/1/17

10.32

CURO Group Holdings Corp. 2017 Incentive Plan, as amended+

DEF14A

Annex A

4/29/21

10.33

2023 PSU Grant Notice and Agreement (performance)+

8-K

10.1

2/23/23

10.34

2023 RSU Grant Notice and Agreement (time-based vesting)+

8-K

10.2

2/23/23

10.35

Employment and Non-Competition Agreement dated as of November 15, 2022 among CURO Group Holdings Corp., CURO Management LLC and Douglas Clark+

8-K

10.1

11/15/22

10.36

Employment and Non-Competition Agreement dated as of November 30, 2022 among CURO Group Holdings Corp., CURO Management LLC and Ismail Dawood+

8-K

10.1

12/6/22

10.37

Separation and Release Agreement among CURO Group Holdings Corp., Curo Management LLC and Donald Gayhardt, effective December 7, 2022+

8-K

10.2

12/12/22

10.38

Employment Agreement dated as of January 17, 2021 between Flexiti Financial Inc. and Peter Kalen+

Filed herewith

21.1

List of Subsidiaries

Filed herewith

23.1

Consent of Independent Registered Public Accounting Firm - Deloitte & Touche LLP

Filed herewith

24.1

Powers of Attorney

Filed herewith

31.1

Certifications of Chief Executive Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith

31.2

Certifications of Chief Financial Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith

32.1

Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended.

Filed herewith

101

The following audited financial information from the Company's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 7, 2022, formatted in Inline Extensible Business Reporting Language (“XBRL”) includes: (i) Consolidated Balance Sheets at December 31, 2021 and December 31, 2020, (ii) Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 and (v) Notes to Consolidated Financial Statements*

Filed herewith

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

Fired herewith

Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish on a supplemental basis to the SEC a copy of any omitted schedule upon request by the SEC.

Portions of this exhibit have been omitted pursuant to Item 601(b)(2)(ii) or 601(b)(10)(iv), as applicable, of Regulation S-K. The Company agrees to furnish on a supplemental basis to the SEC an un-redacted copy upon request by the SEC..

Management contract or compensatory plan, contract or arrangement.

114



*		~~Filed herewith.~~
**		~~Furnished herewith.~~
#		~~Previously filed.~~
+		~~Indicates management contract or compensatory plan, contract or arrangement~~
¥		Confidential treatment pursuant to Rule 406 under the Securities Act has been requested as to certain portions of this exhibit, which portions have been omitted and submitted separately to the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~Company~~registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March ~~13, 2018~~9, 2023 CURO Group Holdings Corp.

By: /s/ ~~Don Gayhardt___________________________~~Douglas Clark_________________________

~~Don Gayhardt~~ Douglas Clark

~~President,~~ Chief Executive Officer ~~and Director~~

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the ~~Company~~registrant and in the capacities ~~indicated~~and on ~~March 13, 2018.~~

the dates indicated.



~~Signature~~/s/ Douglas Clark			~~Title~~
~~/s/ Don Gayhardt~~Douglas Clark
~~President,~~ Chief Executive Officer and a Director ~~(Principal~~
(Principal Executive Officer)
~~Don Gayhardt~~March 9, 2023

/s/ ~~Roger Dean~~Ismail Dawood
Ismail Dawood		~~Executive Vice President and~~
Chief Financial Officer ~~(Principal~~
(Principal Financial Officer)
~~Roger Dean~~March 9, 2023

/s/ ~~David Strano~~Tamara Schulz
Tamara Schulz		~~Vice President and~~
Chief Accounting Officer ~~(Principal~~
(Principal Accounting Officer)
~~David Strano~~March 9, 2023

~~/s/ Doug Rippel~~*
Chad Faulkner		~~Executive~~
Chairman of Board of Directors
~~Doug Rippel~~March 9, 2023

~~/s/ Chad Faulkner~~*			~~Director~~
~~Chad Faulkner~~Andrew Frawley
Director
~~/s/ Mike McKnight~~March 9, 2023			~~Director~~
~~Mike McKnight~~
*
~~/s/ Chris Masto~~David M. Kirchheimer			~~Director~~
~~Chris Masto~~Director
March 9, 2023
~~/s/ Karen Winterhof~~			~~Director~~
~~Karen Winterhof~~*
Chris Masto
~~/s/ Andrew Frawley~~Director			~~Director~~
~~Andrew Frawley~~

~~/s/ Dale Williams~~	~~Director~~
~~Dale E. Williams~~

115


March 9, 2023

*
Mike McKnight
Director
March 9, 2023

*
Gillian Van Schaick
Director
March 9, 2023

*
Issac Vaughn
Director
March 9, 2023

* /s/ Ismail Dawood
Ismail Dawood
Attorney-in-Fact
March 9, 2023

~~158~~

116


Delaware			90-0934597
(State or other jurisdiction Of incorporation or organization)			(I.R.S. Employer Identification No.)

~~Delaware~~ 200 W Hubbard Street, 8th Floor,Chicago, IL			~~90-0934597~~60654
~~(State or other jurisdiction~~ ~~of incorporation or organization)~~		~~(I.R.S. Employer~~ ~~Identification No.)~~

~~3527 North Ridge Road, Wichita, KS~~	~~67205~~
(Address of principal executive offices)		(Zip Code)



Title of ~~Each Class~~each class	Trading Symbol(s)	Name of ~~Each Exchange~~each exchange on ~~Which Registered~~which registered
Common ~~Stock,~~stock, $0.001 par value per share	CURO	New York Stock Exchange



	Installment Unsecured	Installment Secured	Open-End	Single-Pay
Channel	Online and in-store: 15 U.S. States, Canada and the U.K. ⁽¹⁾	Online and in-store: 7 U.S. States	Online: KS, TN, ID, UT, RI, VA, DE and Canada. In-Store: KS, TN and Canada.	Online and in-store: 12 U.S. States, Canada and the U.K. ⁽¹⁾
Average Loan Size ⁽²⁾	$629	$1,303	$579	$334
Duration	Up to 48 months	Up to 42 months	Revolving/Open-Ended	Up to 62 days
Pricing	15.1% average monthly interest rate⁽³⁾	11.4% average monthly interest rate ⁽³⁾	Daily interest rates ranging from 0.74% to 0.99%	Fees ranging from $13 to $25 per $100 borrowed
(1) Online only in the United Kingdom
(2) Includes CSO loans
(3) Weighted average of the contractual interest rates for the portfolio as of December 31, 2017. Excludes CSO fees



☒	~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~



☐	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


Term or abbreviation						Definition




2021 Form 10-K						Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 7, 2022
7.50% Senior Secured Notes						7.50% Senior Secured Notes, issued in July 2021 for $750.0 million, which mature in August 2028
8.25% Senior Secured Notes						8.25% Senior Secured Notes, issued in August 2018 for $690.0 million, which were extinguished during the third quarter of 2021
Ad Astra						Ad Astra Recovery Services, Inc., a wholly-owned subsidiary of the Company, which, prior to acquisition in January 2020, was our exclusive provider of third-party collection services for the legacy Direct Lending U.S. business. The Company ceased operations of Ad Astra in January 2023.
ABL						Asset-Backed Lending
Adjusted EBITDA						EBITDA plus or minus certain non-cash and other adjusting items; Refer to "Supplemental Non-GAAP Financial Information" for additional details
ALL						Allowance for loan losses

AOCI						Accumulated other comprehensive income (loss)
ASC						Accounting Standards Codification
ASU						Accounting Standards Update
Average gross loans receivable						Utilized to calculate product yield and NCO rates; calculated as average of beginning of quarter and end of quarter gross loans receivable
BNPL						Buy-Now-Pay-Later
bps						Basis points
C$						Canadian dollar
CAB						Credit Access Business
Canada SPV						A four-year revolving credit facility with capacity up to C$400.0 million

Curo Canada Revolving Credit Facility						C$5.0 million revolving credit facility (formerly known as Cash Money Revolving Credit Facility), maintained by CURO Canada. This facility was terminated in January 2023.
CDOR						Canadian Dollar Offered Rate
CECL						In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected rather than incurred losses, with an anticipated result of more timely loss recognition. This guidance will be effective for us on January 1, 2023.



CODM						Chief Operating Decision Maker


Community Choice Financial						Community Choice Financial Inc., a consumer financial services company based in Dublin, Ohio, which we sold our Legacy U.S. Direct Lending Business to on July 8, 2022
CSO						Credit services organization

Curo Canada						Curo Canada Corp, a wholly-owned Canadian subsidiary of the Company, formerly known as Cash Money Cheque Cashing Inc.
Curo Receivables Finance II, LLC						A U.S. bankruptcy remote special purpose vehicle and an indirect wholly-owned subsidiary of the Company


EBITDA						Earnings Before Interest, Taxes, Depreciation and Amortization
Exchange Act						Securities Exchange Act of 1934, as amended

FASB						Financial Accounting Standards Board
FinServ						FinServ Acquisition Corp., a publicly traded special purpose acquisition company
FinTech						Financial Technology; the term used to describe any technology that delivers financial services through software, such as online banking, mobile payment apps or cryptocurrency
First Heritage						First Heritage Credit, LLC, a wholly-owned U.S. subsidiary of the Company, which we acquired in July 2022
First Heritage SPV						A revolving credit facility, entered into concurrent with the acquisition of First Heritage, with capacity up to $225.0 million
Flexiti						Flexiti Financial Inc., a wholly-owned Canadian subsidiary of the Company, which we acquired in March 2021
Flexiti Securitization						A non-recourse revolving credit facility, entered into on December 9, 2021, with capacity up to C$526.5 million



	High		Low
Fourth Quarter 2017 (from December 7, 2017)	$	14.99	$	13.50



	Year Ended December 31,
(in thousands, except per share amounts)	2017			2016			2015
Selected Income Statement Data:
Revenue	$	963,633		$	828,596		$	813,131
Gross Margin	349,237			293,256			238,601
Net income	49,153			65,444			17,769
Adjusted Net Income⁽²⁾	79,074			66,411			24,656
Diluted Earnings per Share⁽¹⁾	$	1.25		$	1.69		$	0.46
Adjusted Diluted Earnings per Share ⁽¹⁾	$	2.01		$	1.71		$	0.63
EBITDA⁽³⁾	193,250			191,260			120,006
Adjusted EBITDA⁽⁴⁾	232,215			189,361			130,876
Adjusted EBITDA Margin	24.1		%	22.9		%	16.1		%
Gross Margin Percentage	36.2		%	35.4		%	29.3		%
Weighted Average Shares - diluted⁽¹⁾	39,277			38,803			38,895
Selected Balance Sheet Data:
Gross Loans Receivable	$	432,837		$	286,196		$	252,180
Less: allowance for loan losses	(69,568		)	(39,192		)	(32,948		)
Loans receivable, net	$	363,269		$	247,004		$	219,232
Total assets	$	859,731		$	780,798		$	666,017
Long-term debt	706,225			477,136			561,675
(1) The per share information has been adjusted to give effect to the 36-for-1 stock split that was effective on December 6, 2017.
(2) Adjusted Net Income is defined as Net income plus or minus certain non-cash or other adjusting items. We provide Adjusted Net Income in this Annual Report because our management finds it is useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted Net Income and how we use it, including a reconciliation of Net income to Adjusted Net Income, under “Supplemental Non-GAAP Financial Information” below.
(3) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. We provide EBITDA in this Annual Report because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of EBITDA and how we use it, along with a reconciliation of EBITDA to net income, under “Supplemental Non-GAAP Financial Information” below.
(4) Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, plus or minus certain non-cash or other adjusting items. We provide Adjusted EBITDA in this Annual Report because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted EBITDA and how we use it, along with a reconciliation of Adjusted EBITDA to net income, under “Supplemental Non-GAAP Financial Information” below.



	Year Ended								Year Ended
	December 31, 2017								December 31, 2016
(in thousands)	U.S.		Canada		U.K.		Total		U.S.		Canada		U.K.		Total
Unsecured Installment	$	435,745	$	19,013	$	25,485	$	480,243	$	318,460	$	1,143	$	11,110	$	330,713
Secured Installment	100,981		—		—		100,981		81,453		—		—		81,453
Open-End	73,308		188		—		73,496		66,945		—		3		66,948
Single-Pay	107,553		147,617		13,624		268,794		117,609		173,779		21,888		313,276
Ancillary	20,142		19,591		386		40,119		22,332		13,155		719		36,206
Total revenue	$	737,729	$	186,409	$	39,495	$	963,633	$	606,799	$	188,077	$	33,720	$	828,596



	Three Months Ended
(in millions)	December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016
Company-owned gross loans receivable	$	432.8	$	393.4	$	350.3	$	304.8	$	286.2	$	244.6	$	233.1	$	220.7
Gross loans receivable guaranteed by the Company	78.8		71.2		62.1		57.8		68.0		58.7		52.6		45.4
Gross combined loans receivable	$	511.6	$	464.6	$	412.4	$	362.6	$	354.2	$	303.3	$	285.7	$	266.1



	2017												2016
(dollars in thousands, except average loan amount, unaudited)	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter
Unsecured Installment loans:
Revenue - Company Owned	$	67,800		$	61,653		$	52,550		$	51,206		$	39,080
Provision for losses - Company Owned	29,917			29,079			17,845			19,309			24,557
Net revenue - Company Owned	$	37,883		$	32,574		$	34,705		$	31,897		$	14,523
Net charge-offs - Company Owned	$	32,894		$	23,858		$	18,858		$	(4,918	)	$	18,836
Revenue - Guaranteed by the Company	$	69,078		$	67,132		$	52,599		$	58,225		$	55,234
Provision for losses - Guaranteed by the Company	32,915			36,212			23,575			19,940			22,364
Net revenue - Guaranteed by the Company	$	36,163		$	30,920		$	29,024		$	38,285		$	32,870
Net charge-offs - Guaranteed by the Company	$	31,898		$	34,904		$	27,309		$	17,088		$	21,144
Unsecured Installment gross combined loans receivable:
Company owned	$	196,306		$	181,831		$	156,075		$	131,386		$	102,090
Guaranteed by the Company ^{(1) (2)}	75,156			67,438			58,289			53,978			62,360
Unsecured Installment gross combined loans receivable ^{(1) (2)}	$	271,462		$	249,269		$	214,364		$	185,364		$	164,450
Unsecured Installment Allowance for loan losses ⁽³⁾	$	43,755		$	46,938		$	41,406		$	42,040		$	17,775
Unsecured Installment CSO guarantee liability ⁽³⁾	$	17,072		$	16,056		$	14,748		$	18,482		$	15,630
Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable	22.3		%	25.8		%	26.5		%	32.0		%	17.4%
Unsecured Installment CSO guarantee liability as a percentage of Unsecured Installment gross loans guaranteed by the Company	22.7		%	23.8		%	25.3		%	34.2		%	25.1%



Unsecured Installment past-due balances:
Unsecured Installment gross loans receivable ⁽⁴⁾	$	44,963		$	41,353		$	33,534		$	28,913		—
Unsecured Installment gross loans guaranteed by the Company ⁽⁴⁾	$	12,480		$	10,462		$	8,204		$	11,196		—
Past-due Unsecured Installment gross loans receivable -- percentage ^{(2) (4)}	22.9		%	22.7		%	21.5		%	22.0		%	—
Past-due Unsecured Installment gross loans guaranteed by the Company -- percentage ^{(2) (4)}	16.6		%	15.5		%	14.1		%	20.7		%	—
Unsecured Installment other information:
Originations-Company owned⁽⁵⁾	$	135,284		$	137,618		$	119,636		$	98,691		$	111,412
Average loan amount - Company owned	$	714		$	730		$	697		$	687		$	646
Originations - Guaranteed by the Company ^{(1) (5)}	$	82,326		$	83,680		$	68,338		$	55,112		$	71,858
Average loan amount - Guaranteed by the Company	$	526		$	526		$	485		$	482		$	478
Unsecured Installment ratios:
Provision as a percentage of originations - Company Owned	22.1		%	21.1		%	14.9		%	19.6		%	22.0		%
Provision as a percentage of gross loans receivable - Company Owned	15.2		%	16.0		%	11.4		%	14.7		%	24.1		%
Provision as a percentage of originations - Guaranteed by the Company	40.0		%	43.3		%	34.5		%	36.2		%	31.1		%
Provision as a percentage of gross loans receivable - Guaranteed by the Company	43.8		%	53.7		%	40.4		%	36.9		%	35.9		%
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Consolidated Balance Sheets.
(4) As part of the Q1 Loan Loss Recognition Change past-due receivables remain on our balance sheet until charged off. In all prior periods loans were written-off when a customer missed a scheduled payment.
(5) We have revised previously-reported origination statistics to conform to current year methodology.



	Year Ended December 31,
(in thousands except per share data)	2017			2016			Change $			Change %
Net income	$	49,153		$	65,444		$	(16,291	)	(24.9	)%
Adjustments:
Loss (gain) on extinguishment of debt ⁽¹⁾	12,458			(6,991		)
Restructuring costs ⁽²⁾	7,393			3,618
Legal settlement costs ⁽³⁾	4,311			—
Transaction-related costs⁽⁴⁾	5,573			329
Share-based cash and non-cash compensation⁽⁵⁾	10,446			1,148
Intangible asset amortization	2,502			3,492
Impact of tax law changes⁽⁶⁾	4,635			—
Cumulative tax effect of adjustments	(17,397		)	(629		)
Adjusted Net Income	$	79,074		$	66,411		$	12,663		19.1	%

Net income	$	49,153		$	65,444
Diluted Weighted Average Shares Outstanding	39,277			38,803
Diluted Earnings per Share	$	1.25		$	1.69		$	(0.44	)	(26.0	)%
Per Share impact of adjustments to Net Income	0.76			0.02
Adjusted Diluted Earnings per Share	$	2.01		$	1.71		$	0.30		17.5	%



U.S. Segment Results
	Year Ended December 31,
(dollars in thousands)	2017			2016			Change $			Change %
Revenue	$	737,729		$	606,798		$	130,931		21.6	%
Provision for losses	267,491			207,748			59,743			28.8	%
Net revenue	470,238			399,050			71,188			17.8	%
Advertising costs	36,148			30,340			5,808			19.1	%
Non-advertising costs of providing services	166,875			164,382			2,493			1.5	%
Total cost of providing services	203,023			194,722			8,301			4.3	%
Gross margin	267,215			204,328			62,887			30.8	%
Corporate, district and other	120,803			88,539			32,264			36.4	%
Interest expense	82,495			64,276			18,219			28.3	%
Loss (gain) on extinguishment of debt	12,458			(6,991		)	19,449			#
Restructuring and other costs	—			1,726			(1,726		)	#
Total operating expense	215,756			147,550			68,206			46.2	%
Segment operating income	51,459			56,778			(5,319		)	(9.4	)%
Interest expense	82,495			64,276			18,219			28.3	%
Depreciation and amortization	13,643			13,196			447			3.4	%
EBITDA	147,597			134,250			13,347			9.9	%
Loss (gain) on extinguishment of debt	12,458			(6,991		)	19,449
Restructuring and other costs	—			1,726			(1,726		)
Legal settlement cost	4,311			—			4,311
Other adjustments	(110		)	128			(238		)
Transaction related costs	5,573			329			5,244
Share-based cash and non-cash compensation	10,290			1,148			9,142
Adjusted EBITDA	$	180,119		$	130,590		$	49,529		37.9	%
# - Variance greater than 100% or not meaningful.



Canada Segment Results
	Year Ended December 31,
(dollars in thousands)	2017			2016			Change $			Change %
Revenue	$	186,408		$	188,078		$	(1,670	)	(0.9	)%
Provision for losses	45,075			39,917			5,158			12.9	%
Net revenue	141,333			148,161			(6,828		)	(4.6	)%
Advertising costs	10,415			8,695			1,720			19.8	%
Non-advertising costs of providing services	62,968			60,827			2,141			3.5	%
Total cost of providing services	73,383			69,522			3,861			5.6	%
Gross margin	67,950			78,639			(10,689		)	(13.6	)%
Corporate, district and other	16,952			17,174			(222		)	(1.3	)%
Interest expense	201			85			116			#
Restructuring and other costs	—			898			(898		)	#
Total operating expense	17,153			18,157			(1,004		)	(5.5	)%
Segment operating income	50,797			60,482			(9,685		)	(16.0	)%
Interest expense	201			85			116			#
Depreciation and amortization	4,546			4,827			(281		)	(5.8	)%
EBITDA	55,544			65,394			(9,850		)	(15.1	)%
Restructuring and other costs	—			898			(898		)
Share-based cash and non-cash compensation	156			—			156
Other adjustments	(1,071		)	(373		)	(698		)
Adjusted EBITDA	$	54,629		$	65,919		$	(11,290	)	(17.1	)%
# - Variance greater than 100% or not meaningful.



U.K. Segment Results
	Year Ended December 31,
(dollars in thousands)	2017			2016			Change $			Change %
Revenue	$	39,496		$	33,720		$	5,776		17.1	%
Provision for losses	13,660			10,624			3,036			28.6	%
Net revenue	25,836			23,096			2,740			11.9	%
Advertising costs	5,495			4,886			609			12.5	%
Non-advertising costs of providing services	6,269			7,921			(1,652		)	(20.9	)%
Total cost of providing services	11,764			12,807			(1,043		)	(8.1	)%
Gross margin	14,072			10,289			3,783			36.8	%
Corporate, district and other	17,218			18,561			(1,343		)	(7.2	)%
Interest income	(12		)	(27		)	15			(55.6	)%
Restructuring and other costs	7,393			994			6,399			#
Total operating expense	24,599			19,528			5,071			26.0	%
Segment operating loss	(10,527		)	(9,239		)	(1,288		)	13.9	%
Interest income	(12		)	(27		)	15			(55.6	)%
Depreciation and amortization	648			882			(234		)	(26.5	)%
EBITDA	(9,891		)	(8,384		)	(1,507		)	(18.0	)%
Other adjustments	(35		)	242			(277		)
Restructuring and other costs	7,393			994			6,399
Adjusted EBITDA	$	(2,533	)	$	(7,148	)	$	4,615		64.6	%
# - Variance greater than 100% or not meaningful



(in thousands)	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Debt obligations ⁽¹⁾	$	729,590	$	—	$	—	$	729,590	$	—
Interest on debt obligations ⁽¹⁾	385,195		87,535		175,070		122,590		—
Operating lease obligations	118,916		26,316		42,864		30,420		19,316
Service contracts	8,310		4,212		4,098		—		—
	$	1,242,011	$	118,063	$	222,032	$	882,600	$	19,316
⁽¹⁾ This does not reflect the impact of the redemption of $77.5 million of 12.00% Senior Secured Notes on March 7, 2018, which will reduce Debt obligations due in 3-5 years by $77.5 million and Interest on debt obligations due in Less than 1 year by $4.7 million, due in 1-3 years by $18.6 million, and due in 3-5 years by $14.0 million.



	Common Stock			Dividends in excess of paid-in capital			Retained Earnings			AOCI ⁽¹⁾			Total Stockholders' Equity
	Shares Outstanding	Par Value		Dividends in excess of paid-in capital			Retained Earnings			AOCI ⁽¹⁾			Total Stockholders' Equity
Balances at December 31, 2014	37,894,752	$	1	$	(38,044	)	$	53,622		$	(23,118	)	$	(7,539	)
Net income							17,769						17,769
Foreign currency translation adjustment										(30,512		)	(30,512		)
Repurchase of equity award				(371		)							(371		)
Share based compensation expense				1,271									1,271
Balances at December 31, 2015	37,894,752	1		(37,144		)	71,391			(53,630		)	(19,382		)
Net income							65,444						65,444
Foreign currency translation adjustment										(6,022		)	(6,022		)
Cash flow hedge										(333		)	(333		)
Share based compensation expense				1,148									1,148
Balances at December 31, 2016	37,894,752	1		(35,996		)	136,835			(59,985		)	40,855
Net income							49,153						49,153
Foreign currency translation adjustment										16,713			16,713
Cash flow hedge expiration										333			333
Initial Public Offering	6,666,667	7		81,110									81,117
Dividends				—			(182,000		)				(182,000		)
Share based compensation expense				965									965
Balances at December 31, 2017	44,561,419	$	8	$	46,079		$	3,988		$	(42,939	)	$	7,136

⁽¹⁾Accumulated other comprehensive income (loss)



	December 31
(in thousands)	2017			2016
Foreign currency translation adjustment	$	(42,939	)	$	(59,652	)
Cash flow hedge	—			(333		)
Total	$	(42,939	)	$	(59,985	)



(dollars in thousands)	Year Ending December 31,
2018	$	2,641
2019	1,889
2020	555
2021	128
2022	128



	Year Ended December 31, 2017
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,501		$	17,775		$	10,737		$	5,179		$	—		$	39,192
Charge-offs	(190,623		)	(88,694		)	(30,005		)	(39,752		)	(5,254		)	(354,328		)
Recoveries	127,184			18,002			9,517			18,743			3,291			176,737
Net charge-offs	(63,439		)	(70,692		)	(20,488		)	(21,009		)	(1,963		)	(177,591		)
Provision for losses	63,760			96,150			23,223			22,245			1,963			207,341
Effect of foreign currency translation	93			522			—			11			—			626
Balance, end of period	$	5,915		$	43,755		$	13,472		$	6,426		$	—		$	69,568
Allowance for loan losses as a percentage of gross loan receivables	6.0		%	22.3		%	15.1		%	13.4		%	N/A			16.1		%



	Year Ended December 31, 2016
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	8,313		$	10,603		$	9,209		$	4,823		$	—		$	32,948
Charge-offs	(225,066		)	(165,843		)	(145,160		)	(86,586		)	(5,786		)	(628,441		)
Recoveries	157,398			120,446			128,886			62,859			3,671			473,260
Net charge-offs	(67,668		)	(45,397		)	(16,274		)	(23,727		)	(2,115		)	(155,181		)
Provision for losses	64,919			52,776			17,802			24,083			2,115			161,695
Effect of foreign currency translation	(63		)	(207		)	—			—			—			(270		)
Balance, end of period	$	5,501		$	17,775		$	10,737		$	5,179		$	—		$	39,192
Allowance for loan losses as a percentage of gross loan receivables	6.1		%	17.4		%	17.0		%	17.0		%	N/A			13.7		%



	Stock Options		Weighted Average Exercise Price		Weighted Average Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2016	1,879,308		$	2.73
Granted	99,396		$	8.86
Exercised	—		—
Forfeited	(1,224	)	$	3.39
Outstanding at December 31, 2017	1,977,480		$	3.04	5.2	$	21,831
Options exercisable at December 31, 2017	1,520,688		$	2.52	4.2	$	17,579



Non-vested Restricted Stock	Shares	Weighted Average Grant Date Fair Value
December 31, 2016	—	—
Granted	1,516,241	$	14.00
Vested	—	—
Forfeited	—	—
December 31, 2017	1,516,241	$	14.00



Tax Period	Payment Due (in thousands)
2017	$	644
2018	644
2019	644
2020	644
2021	644
2022	1,208
2023	1,610
2024	2,013
Total	$	8,051



			Estimated Fair Value
(dollars in thousands)	Carrying Value December 31, 2017		Level 1		Level 2		Level 3		December 31, 2017
Financial assets:
Cash	$	162,374	$	162,374	$	—	$	—	$	162,374
Restricted cash	12,117		12,117		—		—		12,117
Loans receivable, net	363,269		—		—		363,269		363,269
Investment	5,600		—		—		5,600		5,600
Financial liabilities:
Credit services organization guarantee liability	$	17,795	$	—	$	—	$	17,795	$	17,795
2017 Senior Secured Notes	585,823		—		—		663,475		663,475
Non-Recourse U.S. SPV facility	120,402		—		—		124,590		124,590



			Estimated Fair Value
(dollars in thousands)	Carrying Value December 31, 2016		Level 1		Level 2		Level 3		December 31, 2016
Financial assets:
Cash	$	193,525	$	193,525	$	—	$	—	$	193,525
Restricted cash	7,828		7,828		—		—		7,828
Loans receivable, net	247,004		—		—		247,004		247,004
Financial liabilities:
Credit services organization guarantee liability	$	17,052	$	—	$	—	$	17,052	$	17,052
May 2011 Senior Secured Notes	223,164		216,449		—		—		216,449
May 2012 Senior Secured Notes	89,734		86,625		—		—		86,625
February 2013 Senior Secured Notes	101,184		96,250		—		—		96,250
February 2013 Cash Pay Notes	124,365		118,301		—		—		118,301
Non-Recourse U.S. SPV facility	63,054		—		—		68,311		68,311
ABL facility	23,406		—		—		23,406		23,406



(dollars in thousands)	December 31, 2017		December 31, 2016
U.S.	$	308,696	$	206,215
Canada	104,551		66,988
U.K.	19,590		12,993
Total gross loans receivable	$	432,837	$	286,196



	Third Party		Related Party		Total
2018	$	22,920	$	3,396	$	26,316
2019	20,046		3,241		23,286
2020	16,335		3,242		19,578
2021	13,212		3,278		16,489
2022	10,665		3,266		13,931
Thereafter	18,532		784		19,316
Total	$	101,709	$	17,207	$	118,916



Year ended December 31, 2017	March 31		June 30		September 30		December 31		Fiscal Year
Net Revenue	$	162,844	$	151,498	$	155,778	$	167,287	$	637,407
Gross Margin	94,905		82,002		80,166		92,164		349,237
Net income before income taxes	26,088		26,961		19,682		18,998		91,729
Net Income	16,638		16,342		9,762		6,411		49,153
Net Income per share - Basic	$	0.44	$	0.43	$	0.26	$	0.15	$	1.28
Net Income per share - Diluted	$	0.43	$	0.42	$	0.25	$	0.15	$	1.25



	December 31, 2017
(dollars in thousands)	CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs			Eliminations			Consolidated			CURO			Eliminations		CURO Consolidated
Assets:
Cash	$	—		$	—		$	117,379		$	44,915		$	—		$	—		$	162,294		$	80		$	—	$	162,374
Restricted cash	—			—			1,677			3,569			6,871			—			12,117			—			—		$	12,117
Loans receivable, net	—			—			84,912			110,651			167,706			—			363,269			—			—		$	363,269
Deferred income taxes	—			2,154			(4,646		)	3,502			—			—			1,010			(238		)	—		$	772
Income taxes receivable	—			—			—			—			—			—			—			3,455			—		$	3,455
Prepaid expenses and other	—			—			38,277			3,353			—			—			41,630			882			—		$	42,512
Property and equipment, net	—			—			52,627			34,459			—			—			87,086			—			—		$	87,086
Goodwill	—			—			91,131			54,476			—			—			145,607			—			—		$	145,607
Other intangibles, net	16			—			5,418			27,335			—			—			32,769			—			—		$	32,769
Intercompany receivable	—			37,877			33,062			(30,588		)	—			(40,351		)	—			—			—		$	—
Investment in subsidiaries	(14,504		)	899,371			—			—			—			(884,867		)	—			(84,889		)	84,889		$	—
Other	5,713			—			3,017			1,040			—			—			9,770			—			—		$	9,770
Total assets	$	(8,775	)	$	939,402		$	422,854		$	252,712		$	174,577		$	(925,218	)	$	855,552		$	(80,710	)	$	84,889	$	859,731
Liabilities and Stockholders' equity:
Accounts payable and accrued liabilities	$	2,606		$	13		$	35,753		$	15,954		$	12		$	—		$	54,338		$	1,454		$	—	$	55,792
Deferred revenue	—			—			6,529			5,455			—			—			11,984			—			—		11,984
Income taxes payable	(49,738		)	70,231			(18,450		)	2,077			—			—			4,120			—			—		4,120
Accrued interest	24,201			—			—			—			1,266			—			25,467			—			—		25,467
Payable to CURO	184,348			—			(95,048		)	—			—			—			89,300			(89,300		)	—		—
CSO guarantee liability	—			—			17,795			—			—			—			17,795			—			—		17,795
Deferred rent	—			—			9,896			1,681			—			—			11,577			—			—		11,577
Long-term debt (excluding current maturities)	585,823			—			—			—			120,402			—			706,225			—			—		706,225
Subordinated shareholder debt	—			—			—			2,381			—			—			2,381			—			—		2,381
Intercompany payable	(668,536		)	876,869			(124,332		)	40,351			(84,001		)	(40,351		)	—			—			—		—
Other long-term liabilities	—			—			3,969			1,799			—			—			5,768			—			—		5,768
Deferred tax liabilities	(2,590		)	6,793			(143		)	7,426			—			—			11,486			—			—		11,486
Total liabilities	76,114			953,906			(164,031		)	77,124			37,679			(40,351		)	940,441			(87,846		)	—		852,595
Stockholders' equity	(84,889		)	(14,504		)	586,885			175,588			136,898			(884,867		)	(84,889		)	7,136			84,889		7,136
Total liabilities and stockholders' equity	$	(8,775	)	$	939,402		$	422,854		$	252,712		$	174,577		$	(925,218	)	$	855,552		$	(80,710	)	$	84,889	$	859,731



	Year Ended December 31, 2015
(dollars in thousands)	CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors		Eliminations			CFTC Consolidated		CURO			Eliminations			CURO Consolidated
Revenue	$	—		$	—		$	573,664		$	239,467	$	—		$	813,131	$	—		$	—		$	813,131
Provision for losses	—			—			222,868			58,342		—			281,210		—			—			281,210
Net revenue	—			—			350,796			181,125		—			531,921		—			—			531,921
Cost of providing services:
Salaries and benefits	—			—			68,928			38,131		—			107,059		—			—			107,059
Occupancy	—			—			30,504			22,784		—			53,288		—			—			53,288
Office	—			—			15,089			4,840		—			19,929		—			—			19,929
Other store operating expenses	—			—			41,661			5,719		—			47,380		—			—			47,380
Advertising	—			—			42,986			22,678		—			65,664		—			—			65,664
Total cost of providing services	—			—			199,168			94,152		—			293,320		—			—			293,320
Gross Margin	—			—			151,628			86,973		—			238,601		—			—			238,601
Operating (income) expense:
Corporate, district and other	2,035			178			79,155			48,017		—			129,385		1,149			—			130,534
Intercompany management fee	—			1			(13,064		)	13,063		—			—		—			—			—
Interest expense	—			49,167			17			111		—			49,295		15,725			—			65,020
Intercompany interest (income) expense	—			(5,583		)	(265		)	5,848		—			—		—			—			—
Goodwill and intangible asset impairment charges	—			—			—			2,882		—			2,882		—			—			2,882
Restructuring costs	—			—			—			4,291		—			4,291		—			—			4,291
Total operating expense	2,035			43,763			65,843			74,212		—			185,853		16,874			—			202,727
Net income (loss) before income taxes	(2,035		)	(43,763		)	85,785			12,761		—			52,748		(16,874		)	—			35,874
Provision for income tax (benefit) expense	(673		)	10,704			4,164			10,291		—			24,486		(6,381		)	—			18,105
Net income (loss)	(1,362		)	(54,467		)	81,621			2,470		—			28,262		(10,493		)	—			17,769
Equity in net income (loss) of subsidiaries:
CFTC	—			—			—			—		—			—		28,262			(28,262		)	—
CURO Intermediate	(54,467		)	—			—			—		54,467			—		—			—			—
Guarantor Subsidiaries	81,621			—			—			—		(81,621		)	—		—			—			—
Non-Guarantor Subsidiaries	2,470			—			—			—		(2,470		)	—		—			—			—
Net income (loss) attributable to CURO	$	28,262		$	(54,467	)	$	81,621		$	2,470	$	(29,624	)	$	28,262	$	17,769		$	(28,262	)	$	17,769