CRMT

New in FY2026

• Risk Factors You should consider carefully the risks described below and other information presented in this Form 10-K, including Item 7.
• Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and related notes included in this Form 10-K, as well as information provided in other reports, registration statements and materials that we file with the SEC and the other information incorporated by reference in this Form 10-K.
• If any of the risks described below or elsewhere in this Form 10-K were to materialize, the Company’s business, financial condition, results of operations, cash flows or prospects could be materially adversely affected.
• In such case, the trading price of the Company’s common stock could decline, and you could lose part or all of your investment.
• Additional risks and uncertainties not currently known to the Company or that the Company currently deems immaterial may also adversely affect the Company’s business, financial condition, results of operations, cash flows, prospects or stock price, which the Company refers to collectively as a material adverse effect on the Company (or comparable phrases).
• Risks Related to the Company ’ s Operations There is substantial doubt about the Company’s ability to continue as a going concern, and holders of the Company’s common stock could experience a significant or complete loss of their investment.
• As described in Note B and Note Q to the Consolidated Financial Statements included in this Annual Report, the Company’s constrained liquidity and its failure, or expected failure, to comply with certain financial covenants under the Term Loan subsequent to April 30, 2026 raise substantial doubt about the Company’s ability to continue as a going concern, and the report of the Company’s independent registered public accounting firm on the Company’s fiscal 2026 Consolidated Financial Statements includes an explanatory paragraph regarding that substantial doubt.
• The Company has obtained covenant relief from its lenders only for a limited period and subject to the satisfaction of specified milestones and conditions, and management’s plans to address these conditions—including the review of strategic and financing alternatives being conducted under the oversight of a Special Committee of the Board of Directors—have not been fully implemented, are subject to factors outside of the Company’s control, and may not be successful.
• If the Company is unable to obtain sufficient liquidity, additional covenant relief or waivers, or new financing, or to consummate one or more strategic transactions, on acceptable terms or at all, the Company may be forced to seek relief under federal bankruptcy laws or to pursue a restructuring, wind-down, or liquidation, and holders of the Company’s common stock could experience a significant or complete loss of their investment.
• In addition, the existence of substantial doubt about the Company’s ability to continue as a going concern could adversely affect the Company’s relationships with customers, associates, suppliers, and other counterparties, its ability to attract and retain qualified personnel, and its ability to obtain financing on acceptable terms.
• To preserve liquidity, the Company has curtailed its purchases of vehicle inventory, which has reduced and is expected to continue to reduce the Company's vehicle sales, finance receivable originations, and revenues.
• The Company funds the acquisition of vehicle inventory primarily using cash flows from operations and collections on its finance receivables, and it does not currently have a revolving credit facility or warehouse credit facility available to fund inventory purchases.
• As a result of the constraints on the Company's liquidity—including the dedication of operating cash flows to debt service, the limitations imposed by the covenants under the Company's senior secured term loan, any decline in collections on its finance receivables, and the Company's inability to-date to establish a warehouse credit facility or other financing arrangements—the Company has significantly reduced, and for periods substantially suspended, its purchases of vehicle inventory.
• This reduction in inventory purchasing, together with the closure of approximately 60 dealership locations during fiscal 2026, has reduced the quantity and selection of vehicles available for sale at the Company's dealerships.
• A reduced and aging inventory has adversely affected, and is expected to continue to adversely affect, the Company's vehicle unit sales and revenues and the origination of new finance receivables.
• Because the Company finances substantially all of the vehicles it sells and derives a substantial portion of its revenues from interest income on its finance receivables, lower vehicle sales and reduced originations also reduce interest income and the future collections and operating cash flows available to fund inventory purchases and to service the Company's indebtedness.
• These effects may be self-reinforcing: constraints on the Company's liquidity reduce its ability to purchase inventory, which reduces vehicle sales, finance receivable originations and collections, which in turn further constrains the Company's liquidity.
• If the Company is unable to restore adequate inventory-purchasing capacity, including by re-establishing a warehouse or other financing arrangement and continuing to complete asset-backed securitization transactions, these conditions could continue to compound and have a further material adverse effect on the Company, including its liquidity, financial condition and results of operations.
• The Company has a substantial amount of indebtedness, including the Term Loan, and the restrictive covenants in its debt agreements limit its operating and financial flexibility.
• In addition, the Company has recently entered into an amendment to the Term Loan under which the lenders agreed to temporarily waive certain defaults or anticipated defaults by the Company of certain conditions to the Term Loan, subject to the Company's compliance with certain milestones during the waiver period.
• A failure to comply with these milestones or the covenants in the Company's debt agreements could result in an event of default that, if not cured or waived, could result in the acceleration of the Company’s indebtedness, in which case such indebtedness would become immediately due and payable, the Company's lenders could foreclose on pledged collateral, the Company could be forced to enter into restructuring or liquidation proceedings, and holders of the Company's common stock could experience a significant or complete loss on their investments.
• As of April 30, 2026, the Company had approximately $722.4 million of total outstanding indebtedness as reflected on its consolidated balance sheet, including approximately $263.7 million outstanding under the Term Loan, representing the carrying value, net of unamortized discount and debt issuance costs, of the $300.0 million principal amount outstanding, and approximately $458.7 million of non-recourse notes payable issued through asset-backed securitization transactions.
• The amount that would be required to repay the Term Loan exceeds the outstanding principal amount as a result of the call premium and make-whole provisions of the Credit and Guaranty Agreement.
• This level of indebtedness, together with any sustained decline in the Company’s operating cash flows, could have important consequences for the Company and its stockholders.
• In recent quarters, the principal constraint on the Company's available liquidity has been the amortization structure of its outstanding asset-backed securitization trusts, together with the restrictive covenants under the Company's Term Loan and its inability, to date, to secure a revolving warehouse credit facility or other financing.
• The Company collects a significant amount of payments each month from customers, consisting of principal, interest, and fee payments on its finance receivables portfolio, but under the accelerated amortization structure that applies to most of its outstanding securitizations, a significant amount of those collections is paid directly to the trusts to retire outstanding non-recourse notes, leaving a reduced amount available to the Company to fund vehicle inventory purchases, finance receivable originations, and other operating needs.
• A revolving credit or warehouse facility would allow the Company to draw against the facility to fund operations and bridge the difference between the collections retained by the trusts and the Company's near-term funding needs; without one, the Company has had to rely on the reduced pool of collections it retains after trust paydowns, together with cash on hand.
• As a result, the Company has curtailed vehicle inventory purchases and reduced its dealership operations and finance receivables originations.
• The Company's reduced operations and resulting cash flow constraints make it more difficult for the Company to satisfy its obligations under the Term Loan and its other indebtedness, resulting in possible defaults on, and acceleration of, such indebtedness.
• On June 19, 2026, the Company entered into an amendment to the Term Loan under which the lenders agreed to waive, during a limited relief period, certain specified defaults and anticipated defaults under the Term Loan, including with respect to the minimum liquidity and minimum collateral coverage ratio covenants and the requirement to deliver an audit opinion without a going concern qualification for fiscal 2026 (the “Amendment”).
• The relief period extends through September 7, 2026, subject to automatic extension through September 21, 2026 and November 6, 2026 only if specified conditions are satisfied, and the waivers become permanent only if the Company satisfies the conditions of the Amendment.
• During the relief period, the Company must comply with certain milestones and conditions, including maintaining a special committee of independent directors, delivering certain forecasts and reports (including a 13-week cash flow budget), progressing a process to explore financing, recapitalization, restructuring, or other strategic transactions, and entering into a support agreement with the administrative agent and requisite lenders, and the Company remains subject to revised financial covenants during the relief period, including minimum liquidity of $7.0 million as of each Friday and $5.0 million at all other times and a minimum collateral coverage ratio of 1.25 to 1.00 as of June 30, 2026 and 1.20 to 1.00 as of each month-end thereafter, enhanced reporting obligations, and restrictions on taking certain material actions.
• The Company also agreed to pay fees to the lenders of up to $18.0 million in connection with the Amendment and related waivers.
• Any failure to comply with the milestones or the restrictive covenants under the Term Loan could result in possible defaults on, and acceleration of, the Company's indebtedness; require the Company to dedicate further cash flows from operations to the payment of principal and interest on its indebtedness, thereby further reducing the funds available to purchase vehicle inventory, originate finance receivables, fund working capital and capital expenditures, and meet other general corporate needs; limit the Company’s ability to obtain additional financing or to refinance its existing indebtedness, or increase the cost of any such financing; and increase the Company’s vulnerability to adverse general economic and industry conditions, including increases in interest rates to the extent the Company’s borrowings bear interest at variable rates.
• The agreements governing the Term Loan and the Company’s other debt instruments contain a number of other affirmative and negative covenants that impose operating and financial restrictions on the Company and may limit its ability to engage in acts that may be in its long-term best interest.
• These restrictions may limit the Company’s ability to, among other things, incur additional indebtedness, grant liens on its assets, make investments or acquisitions, dispose of assets, pay dividends or make other restricted payments, and enter into certain other transactions.
• In addition, the Company is required to comply with specified financial covenants.
• The Company’s ability to comply with these covenants may be affected by events beyond its control, including any continued deterioration in its operating results, the performance of its finance receivables portfolio, and the costs and disruption associated with dealership closures, and there can be no assurance that the Company will remain in compliance with these covenants in future periods.
• A breach of any of these covenants, or the Company’s failure to comply with the required financial covenants or ratios, could result in an event of default under the Term Loan or the Company’s other debt agreements.
• If the Company breaches a covenant or anticipates that it may not remain in compliance with a financial covenant in a future period, it would be required to seek a waiver or an amendment from its lenders, and there can be no assurance that the Company would be able to obtain any such waiver or amendment on acceptable terms, or at all.

and 103 more.

Gone since FY2025

• Risk Factors The Company is subject to various risks.
• The following is a discussion of risks that could materially and adversely affect the Company’s business, operating results, and financial condition.
• A downturn in economic conditions, disruptions in the equity or debt markets, high unemployment or underemployment, depressed vehicle or housing prices, unsustainable debt levels, high inflation, high interest rates, unfavorable changes in interest rates, the introduction of trade tariffs or other policies that negatively impact the automotive industry, declines in household incomes or savings, deteriorating consumer or business sentiment, consumer or commercial bankruptcy filings, or declines in the strength of national or local economies could decrease demand for our products and services, increase the amount and rate of delinquencies and losses, raise our operating and other expenses, and negatively impact the returns on and the value of our portfolio.
• Recent and future disruptions in domestic and global economic and market conditions, including as a result of the recent and potential future implementation of increased tariffs and other changes in trade policies, or significant changes in the political environment and/or public policy, could adversely affect consumer demand or increase the Company’s costs, resulting in lower profitability for the Company.
• Additionally, the Company’s ability to procure vehicles may be adversely affected by disruptions in the wholesale and auction markets, including closures or reduced operations due to future public health crises, continued economic volatility, or other unforeseen factors.
• The Company competes for both the purchase and resale, which includes, in most cases, financing for the customer, of used vehicles.
• These sales are made primarily to customers residing in Alabama, Arkansas, Georgia, Illinois, Kentucky, Mississippi, Missouri, Oklahoma, Tennessee and Texas with approximately 28 % of revenues resulting from sales to Arkansas customers.
• The Company ’ s growth strategy is dependent upon the following factors: • Favorable operating performance.
• Our ability to increase revenues at existing dealerships or expand our business through additional dealership openings or strategic acquisitions is dependent on a sufficiently favorable level of operating performance to support the management, personnel and capital resources necessary to successfully grow existing locations, open and operate new locations, or complete acquisitions. • Ability to successfully identify, complete and integrate new acquisitions.
• The success of new dealerships is dependent upon the Company being able to hire and retain additional competent personnel.
• While new car sales volumes and the operations of auctions and wholesalers have generally stabilized since the pandemic, long-term changes in supply chain dynamics and vehicle turnover continue to create uncertainty and could be impacted by tariffs or the imposition of new tariffs, trade wars, barriers or restriction, or threats of such actions.
• The Company expects this pattern to continue in future years.
• The continued health and productivity of our associates, including management teams, is critical to our business, and any disruption could adversely affect our operations, The consequences of any future adverse public health developments could have a material adverse effect on our business, sales, results of operations and financial condition.
• Risks Related to the Company ’ s Operations The Company identified a material weakness in its internal control over financial reporting, and if it is unable to achieve and maintain effective internal control over financial reporting, its ability to produce accurate financial statements on a timely basis could be impaired and its public reporting may be unreliable.
• Effective internal control over financial reporting is necessary for the Company to detect and prevent material misstatements in a timely manner in order to provide reasonable assurance regarding the reliability of our financial reporting and the presentation of its financial statements in accordance with GAAP.
• Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed by the Company in the reports we file or submit to the SEC is accumulated and communicated to management to allow timely decisions regarding required disclosure.
• Based on the Company’s evaluation of the effectiveness of its internal control over financial reporting as of April 30, 2025, the Company determined that it had a material weakness as of April 30, 2025 because of inadequate controls to appropriately analyze all relevant information required for complete and accurate presentation and disclosure under GAAP.
• This principally resulted from (1) incorrect assessment during the initial adoption of ASU 2022-02, (2) ineffective disclosure controls and procedures that did not identify missing required disclosures under ASC 310-10-50-42 through 50-44, and (3) turnover in technical accounting resources leading to a reduction of requisite expertise.
• Accordingly, the Company’s disclosure controls and procedures and internal control over financial reporting as of April 30, 2025 were not effective due to the material weakness discussed above.
• The Company is implementing significant organizational and process improvements to address the material weakness, including hiring experienced financial reporting personnel and enhancing its disclosure controls and procedures.
• The remediation actions are being monitored by the Audit Committee of the Board of Directors.
• However, the Company cannot assure you that these efforts will remediate this material weakness in a timely manner, or at all, or that the Company will be able to maintain effective controls and procedures even if it remediates this material weakness.
• If the Company is unable to successfully remediate this material weakness, design or operate effective controls and procedures, or identify any future material weaknesses, the accuracy and timing of its financial reporting may be adversely affected, it may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports and it may experience a loss of public confidence, which could have an adverse effect on the Company’s business, financial condition and the market price of the Company’s common stock.
• As an “accelerated filer,” the Company’s independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.
• Any additional undetected material weaknesses in the Company’s internal controls could lead to further financial statement restatements and require the Company to incur additional expenses of remediation.
• In addition, if the Company is unable to remediate this material weakness, or if the Company is otherwise unable to conclude that its internal control over financial reporting is effective, the Company could lose investor confidence in the accuracy and completeness of its financial reports, the market price of its securities could decline, and the Company could be subject to sanctions or investigations by regulatory authorities.
• Failure to remedy any material weakness in the Company’s internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict the Company’s future access to the capital markets.
• Because the Company maintains a decentralized operation in which each dealership is responsible for inspecting and selling its own vehicles, making credit decisions and collecting contracts it originates, the key employees at each dealership are important factors in the Company’s ability to implement its business strategy.
• Changes in the availability or cost of capital and working capital financing could adversely affect the Company ’ s growth and business strategies, and volatility and disruption of the capital and credit markets and adverse changes in the global economy could have a negative impact on the Company ’ s ability to access the credit markets in the future and/or obtain credit on favorable terms.
• In addition to income from continuing operations, the Company generally funds its finance receivables growth and operations through borrowings under its revolving credit facilities and periodic issuances of non-recourse notes through asset-back securitization transactions.
• On a long-term basis, the Company expects its principal sources of liquidity to consist of income from continuing operations and borrowings under revolving credit facilities and/or term securitizations.
• Any adverse changes in the Company’s ability to borrow under revolving credit facilities or by accessing the securitization market, or any increase in the cost of such borrowings, would likely have a negative impact on the Company’s ability to finance receivables growth which would adversely affect the Company’s growth and business strategies.
• Further, the Company’s current credit facilities and non-recourse notes payable contain various reporting and/or financial performance covenants.
• Any failure of the Company to comply with these covenants could have a material adverse effect on the Company’s operating results, financial condition, cash flow and ability to implement its business strategy.
• If the capital and credit markets experience disruptions and/or the availability of funds becomes restricted, it is possible that the Company’s ability to access the capital and credit markets may be limited or available on less favorable terms which could have an impact on the Company’s ability to refinance maturing debt or react to changing economic and business conditions.
• In addition, if negative domestic or global economic conditions persist for an extended period of time or worsen substantially, the Company’s business may suffer in a manner which could cause the Company to fail to satisfy the financial and other restrictive covenants under its credit facilities.
• The price of the Company’s common stock may also be subject to wide fluctuations based upon the Company’s operating results, general economic and market conditions, general trends and prospects for our industry, announcements by competitors, the Company’s ability to achieve any long-term targets or performance metrics and other factors.
• The Company is also restricted from paying dividends or making other distributions to its shareholders without the consent of its lender.