SPFX 10-K & 10-Q changes, risk factors and insider trading

Our business business model is dependent upon our ability to borrow to maintain and grow our ability to lend money to our customers. On February 3, 2021, we entered into a new two-year line of credit in the maximum amount of $35 million, which was immediately funded for $25,974,695 to pay off the prior line of credit lender. In October 2021, the line of credit facility increased by $10 million to a total of $45 million. In November 2022, the term of the line of credit was extended until November 30, 2025. In June 2025, the Company increased its line of credit with First Horizon Bank from $45,000,000 to $50,000,000. In September 2025, the Company increased its line of credit with First Horizon Bank from $50,000,000 to $75,000,000 and extended the maturity until September 25, 2028. If we fail to renew or replace our line of credit at the expiration of the current term, or we default on our line of credit, then our ability to continue our lending business at current levels and meet our other obligations, would be materially adversely affected. Since the amount of money we can borrow on our revolving credit line is based on a percentage of our entire loan portfolio less certain ineligible items, our other corporate debt (i.e., subordinated and un-subordinated debt) plus our retained earnings and stockholder equity alone may limit our ability to increase the size of our loan portfolio.

We believe believe that our success depends, in part, on our ability to attract and retain experienced personnel, including our senior management and other key personnel. The departure of senior manager or other key personnel may damage relationships with certain customers, or certain customers customers may choose to follow such personnel to a competitor. The loss of any of our senior managers or other key personnel, or our inability to to identify, recruit and retain such personnel, could materially and adversely affect our business, results of operations and financial condition. condition. All of our employees are “at will” with no fixedguaranteed termperiod of employment.employment except our CEO and CFO who have executive contracts through March 2030.

We originate loans primarily in in Florida, although we operate in several states. Over the past three years, the Company has expanded its operations, and currently is financing financing insurance premiums in Arizona,eighteen Colorado,states. Connecticut,Throughout Florida, Georgia, Massachusetts, Maryland, Michigan, North Carolina, Pennsylvania, South Carolina, Texas,2024 and Virginia. Throughout 2023 and 2024,2025, we have obtained additional licenses for a total of thirty-sevenforty-one states. states. We intend to continue to expand our market into new states as part of our organic growth strategy. Loans are originatedoriginate primarily through a network of insurance agents solicited by our in-house sales team and marketing representatives.

Revenue increased by 24.9%2.7% overall or $2,420,133$326,627 to to $12,469,770 for the year ended December 31, 2025 from $12,143,143 for the year ended December 31, 2024 from $9,723,010 for the year ended December 31, 2023.2024. The increase in revenue was due due to a 27.3%4.1% or $2,263,648$429,735 increase in finance charges, partially offset by a 13.3%6.6% or $141,700$80,305 increasedecrease in revenue from late charges,charges and a 4.0%5.9% or $18,785 increase$22,803 decrease in origination charges. Revenue from finance charges comprised 86.9%88.0% of overall revenue for the year ended December 31, 2024.2025.

During the year ended December 31, 20242025 compared to to the year ended December 31, 2023,2024, the company financed an additional $18,363,755$8,626,962 in new loan originations.originations, an increase of 5.8%. This increase was due largely to increased marketing efforts throughout our established and new states, primarily by hiring additional marketing representatives in Florida and Texas.the Midwest. The Company also noted a 1,1672,226 increase in the quantity of loan originations to 24,79427,020 new loans for the year ended December 31, 2024 as compared to 23,627 for the year ended December 31, 2023.2025 as compared to 24,794 for the year ended December 31, 2024. The quantity of loan originations is directly correlated to the increase in origination charge revenue, as the Company immediately recognizes an origination fee on substantially all new loans.

Under the terms of the line of credit agreement, the loan receivables and our other assets provide the collateral for the loan. As the receivables increase, driven by new sales, the company has greater borrowing power, giving it the opportunity to generate additional sales. In NovemberSeptember 2022,2025, the Company extendedincreased the maturity of thisits line of credit from $50,000,000 to $75,000,000, with an additional $40 million accordion feature, and extended the maturity until NovemberSeptember 30, 2025.2028. See Future Cash Requirements for the Company’s strategy regarding its line of credit.

We had $1,716$10,970 of cash and a working capital surplus of $14,566,412$15,124,071 at December 31, 2024.2025. A significant working capital surplus is generally expected through the normal course of business due primarily to the difference between the balance in loan receivables and the related line of credit liability. As discussed in the Revenues section, the Company’s line of credit is currently the primary source of operating funds. In FebruarySeptember 2025, 2021, the Company enteredrenewed intoand aamended contractits agreement with a new lender, First Horizon Bank, for a two-yearthree-year $35,000,000 line of credit. In October 2021, the Company further increased its borrowing power on its$75,000,000 line of credit to $45,000,000,with an increaseadditional $40,000,000 ofuncommitted $10,000,000.accordion In November 2022, the Company extended the maturity of this line of credit until November 30, 2025 and replaced the benchmark rate of the loan from 30-day LIBOR to 30-day SOFR (Secured Overnight Financing Rate). LIBOR ceased to be published after June 30, 2023.feature. The terms of the amended line of credit include an interest rate based on the 30-day SOFR rate plus an applicablea margin of 2.55% - 2.96%,2.10%, with a minimum rate of 3.35%. The applicable margin is based on the Company’s ratio of total liabilities to tangible net worth. As of December 31, 2024, the Company’s applicable margin was 2.75%. We believe that we will be able to obtain an extension of our current line of credit or negotiate a replacement line of credit with no material impact on our operations.2.60%. We anticipate that the interest rate we pay on our revolving credit agreement may may decrease due to the recently adopted benchmark interest rate decreases by the Federal Reserve Board. Because of the short-term nature of our loans, we are not bound to any particular loan and its fixed interest rate for a long period of time. Based on our estimates and taking into account the risks and uncertainties of our plans, we believe that we will have adequate liquidity to finance and operate our business and repay our obligations as they become due in the next 12twelve months.

As the Company anticipates its its growth patterns to continue, a larger line of credit is paramount to fueling this growth. The Company’s line of credit is $45,000,000$75,000,000 and its maturity on its line of credit facility isSeptember November25, 30,2028. 2025.Extended Wematurity believeprovides thatstability wefor willthe beCompany’s ablefuture cash to obtain an extension of our current line of credit or negotiate a replacement line of credit with no material impact on our operations. The Company does not currently have any offers to extend or replace its line of credit.requirements.

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I. “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on March 20, 2026 (“2025 Form 10-K”), which could adversely affect our business, financial condition, results of operations and cash flows. During the three months ended MarchJune 31,30, 2026, there have been no material changes in our our risk factors disclosed in our 2025 Form 10-K.

The Company’s main source of funding is its line of credit, which represented approximately 65%69% ($54,026,565$61,835,009) of its capital and total liabilities as of MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, the Company’s subordinated notes payable and other loans represented approximately 14%13% ($11,899,817$12,108,286) of the Company’s capital and total liabilities, operating liabilities provide approximately 10%8% ($7,962,174$6,901,915) of the Company’s capital and total liabilities, preferred equity provides approximately 2% ($1,660,000) of the Company’s capital and total liabilities, and equity in retained earnings and common stock paid-in capital represents the remaining 9%8% ($7,045,235$7,355,735) of the Company’s capital and total liabilities.

Cost of Funds Rate, Net is calculated as interest expense divided by average debt outstanding for the period, net of the interest related tax benefit. Cost of Funds Rate, Net is a Non-GAAP operating metric that is useful in comparing the cost of capital of different sources. Debt capital provides a tax benefit that is not provided by preferred equity or common equity capital. The blended tax rate used in this metric is estimated to be 25% for all periods presented. The following tabletables providesprovide a reconciliation of the Cost of Funds Rate, Net (Non-GAAP) to Cost of Funds Rate, Gross:

Results of Operations for the Three Months ended MarchJune 31,30, 2026 Compared to the Three Months ended MarchJune 31.30. 2025

Revenue increased by 14.5%11.1% overall or $420,236 $345,774 to $3,316,369$3,461,598 for the three months ended MarchJune 31,30, 2026 from $2,896,133$3,115,824 for the three months ended MarchJune 31,30, 2025. The increase in revenue was primarily due to aan 15.4%11.0% or $390,016$302,591 increase in finance charges. Revenue from finance charges comprised 88.1%88.4% and 87.4% 88.5% of overall revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

During the three months ended March 31,June 30, 2026 compared to the three months ended MarchJune 31,30, 2025, the company financed $7,222,157 additionalcompany’s new loan originations.originations increased by $8,306,911. This increase was was due largely to increased marketing efforts throughout our established and new states, primarily by hiring additional marketing representatives in Florida and the Midwest. TheAdditionally, the total quantity of loan originations remained relativelystable, stabledecreasing by 102 for the three months ended March 31,June 30, 2026 as compared to the three months ended MarchJune 31,30, 2025. The quantity of loan originations is directly correlatescorrelated to the origination charge charge revenue, as the Company immediately recognizes an origination fee on substantially all new loans.

Expenses increased by 12.0%7.2% or $295,750$199,460 to $2,753,850 for the three months ended March 31, 2026 from $2,458,100$2,969,816 for the three months ended MarchJune 31,30, 2026 from $2,770,356 for the three months ended June 30, 2025.

Income before taxes increased by $146,314 $124,486 to $562,519$491,782 for the three months ended MarchJune 31,30, 2026 from $438,033$345,468 for the three months ended MarchJune 31,30, 2025. This increase was attributable attributable to the net increases and decreases as discussed above.

Income tax provision increased by $52,248 $28,751 to $154,452 for the three months ended March 31, 2026 from $102,204$116,132 for the three months ended MarchJune 31,30, 2026 from $87,381 for the three months ended June 30, 2025. This increasedecrease was primarily attributable attributable to thean increase in taxable income.

Net Income increased by $72,238 $117,563 to $408,067 for the three months ended March 31, 2026 from $335,829$375,650 for the three months ended MarchJune 31,30, 2026 from $285,087 for the three months ended June 30, 2025. This increase was attributable to the $124,486 $146,314 increase in income before taxes related primarily to increased revenues, partially offset by the $52,248$28,751 increase in the provision for income taxes.

LIQUIDITY and CAPITAL RESOURCES as of MarchJune 30, 31, 2026

We had $10,609 $20,688 of cash and a working capital surplus of $16,947,882$86,525,494 at MarchJune 31,30, 2026. A significant working capital surplus is generally expected through the normal course of business due primarily to the difference between the balance in loan receivables and the related line of credit liability. As discussed in the Revenues section, the Company’s line of credit is currently the primary source of operating funds. In September 2025, the Company renewed and amended its agreement with First Horizon Bank, for a three-year $75,000,000 line of credit with an additional $40,000,000 uncommitted accordion feature. The terms of the amended line of credit include an interest rate based on the 1-Month Term SOFR rate plus a margin of 2.10%, with a minimum rate of 2.60%. We anticipate that the interest rate we pay on our revolving credit agreement may decreaseincrease due to the recently adoptedfuture benchmark interest rate decreasesincreases by the Federal Reserve Board. Because of the short-term nature of our loans, we are not bound to any particular loan and its fixed interest rate for a long period of time. Based on our estimates and taking into account the risks and uncertainties of our plans, we believe that we will have adequate liquidity to finance and operate our business and repay our obligations as they become due in the next twelve months.

During the threesix months ended March 31,June 30, 2026, the Company raised an additional $10,000$292,500 in subordinated notes payable, repaid $137,000 in subordinated notes payable, raised an additional $60,000 in subordinated notes payable – related parties, and repaid $60,000 in subordinated notes payable – related parties. The Company utilizes its cash inflows from subordinated debt as a financing source before drawing additionally additionally from the line of credit.

We consider the following to be our most critical accounting policypolicies because itthey involvesinvolve critical accounting estimates and a significant degree of management judgment: