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Item 8. Financial Statements and Supplementary Data

2021-11-17 compared with 2020-12-14 · 439 added, 415 removed, 827 unchanged (51% of the section changed)

ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

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Consolidated Statements of Operations for each of the three years ended September 30, 2021, 2020 and 2019

Consolidated Statements of Comprehensive (Loss) Income for each of the three years ended September 30, 2020, 2019 and 2018

Consolidated Statements of Comprehensive Income (Loss) for each of the three years ended September 30, 2021, 2020 and 2019

Consolidated Statements of Stockholders’ Equity for each of the three years ended September 30, 2021, 2020 and 2019

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Organization and Summary of Significant Accounting Policies

Other C harge s

(Loss) Earnings Per Share

Other Charges

Earnings (Loss) Per Share

Strategic Investments

Fair Valu e Measurements

Fair Value Measurements

Property and Equipment

Goodwill and Intangib le Assets

Goodwill and Intangible Assets

Common Stock and Stock Compensation

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Supplemental Consolidated Financial Information

Subsequent Events

Quarterly Information (Unaudited)

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We have audited the accompanying consolidated balance sheets of EZCORP, Inc.

(the “Company”) as of September 30, 2020 and 2019, the related consolidated statements of operations and comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have 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 September 30, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated December 14, 2020 expressed an unqualified opinion thereon.

We also have 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 September 30, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated November 17, 2021 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Bajio Leases

As described in Note 3 to the Company’s consolidated financial statements, the Company recorded approximately $10.7 million of right-of-use assets and lease liabilities on June 8, 2021, in connection with the Company’s acquisition of 100% of the common shares of PLO del Bajio S.

These leases primarily relate to the 128 pawn stores which were added to the Company’s geographic footprint within Mexico as a result of the acquisition.

We identified the accounting for the leases recorded as a result of the Bajio acquisition as a critical audit matter.

Accounting for the acquired leases required management’s individual assessment of the varying terms of the large volume of leases acquired, and the estimation of the appropriate incremental borrowing rate for each lease.

Auditing these elements involved especially challenging audit effort due to the volume

of leases acquired, as well as the specialized skills and knowledge required to assess the reasonableness of the incremental borrowing rates estimated by management.

The primary procedures we performed to address this critical audit matter included:

• Examining a sample of lease agreements, which required language translation, to determine that the varying terms were appropriately interpreted and accurately utilized in management’s calculation of the right-of-use asset and lease liability balances.

• Verifying that the lease liability balances were properly recognized as of the acquisition date, by testing the accuracy of the initial measurement of the lease liabilities for a sample of leases, including verifying that the present value of the lease payments was clerically accurate and the Company correctly applied the provisions of ASC 842.

• Utilizing personnel with specialized knowledge and skills in valuation to assist in assessing the reasonableness of the incremental borrowing rates estimated by management.

/s/ BDO USA, LLP

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Dallas, Texas

December 14, 2020

November 17, 2021

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

September 30,

(in thousands, except share and per share amounts)

Current assets:

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Inventory, net 110,989 95,891

Notes receivable, net — 7,182

Prepaid expenses and other current assets 31,010 32,903

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Property and equipment, net 53,811 56,986

Lease right-of-use asset 183,809 —

Right-of-use asset, net 200,990 183,809

Goodwill 285,758 257,582

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Fiscal Year Ended September 30,

2020 2019 2018

(in thousands, except per share amounts) 2021 2020 2019

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Operating expenses:

Operations 341,040 358,253 334,841

Administrative 49,897 55,990 53,639

Store expenses 330,837 336,770 350,578

General and administrative 56,495 54,133 63,665

Impairment of goodwill, intangible and other assets — 54,666 —

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Total operating expenses 418,316 497,585 447,439

Operating (loss) income ( 48,384 ) 47,009 67,124

Operating income (loss) 31,169 ( 48,384 ) 47,009

Interest expense 22,177 22,472 32,637

Interest income ( 2,477 ) ( 3,173 ) ( 11,086 )

Equity in net loss (income) of unconsolidated affiliates 2,429 135 ( 5,529 )

Equity in net (income) loss of unconsolidated affiliates ( 3,803 ) 2,429 135

Impairment of investment in unconsolidated affiliates — — 19,725

Other (income) expense ( 790 ) ( 17 ) 1,424

Income from continuing operations before income taxes ( 70,095 ) 4,174 55,539

Income tax (benefit) expense ( 1,632 ) 2,406 18,389

(Loss) income from continuing operations, net of tax ( 68,463 ) 1,768 37,150

Income (loss) from continuing operations before income taxes 16,062 ( 70,095 ) 4,174

Income tax expense (benefit) 7,450 ( 1,632 ) 2,406

Income (loss) from continuing operations, net of tax 8,612 ( 68,463 ) 1,768

Loss from discontinued operations, net of tax — — ( 457 )

Net (loss) income ( 68,463 ) 1,311 36,294

Net income (loss) 8,612 ( 68,463 ) 1,311

Net loss attributable to noncontrolling interest — — ( 1,230 )

Net (loss) income attributable to EZCORP, Inc.

Net income (loss) attributable to EZCORP, Inc.

$ 8,612 $ ( 68,463 ) $ 2,541

Basic (loss) earnings per share attributable to EZCORP, Inc.

Basic earnings (loss) per share attributable to EZCORP, Inc.

— continuing operations $ 0.15 $ ( 1.24 ) $ 0.05

Diluted (loss) earnings per share attributable to EZCORP, Inc.

Diluted earnings (loss) per share attributable to EZCORP, Inc.

— continuing operations $ 0.15 $ ( 1.24 ) $ 0.05

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See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

Net (loss) income $ ( 68,463 ) $ 1,311 $ 36,294

Other comprehensive loss:

Foreign currency translation loss, net of income tax expense (benefit) for our investment in unconsolidated affiliate of $ 354 , $( 708 ) and $( 353 ) for the years ended September 30, 2020, 2019 and 2018, respectively

( 15,678 ) ( 10,042 ) ( 2,638 )

Comprehensive (loss) income ( 84,141 ) ( 8,731 ) 33,656

Net income (loss) $ 8,612 $ ( 68,463 ) $ 1,311

Other comprehensive income ( loss):

Foreign currency translation adjustment, net of tax 9,653 ( 15,678 ) ( 10,042 )

Comprehensive income (loss) 18,265 ( 84,141 ) ( 8,731 )

Comprehensive loss attributable to noncontrolling interest — — ( 1,230 )

Comprehensive (loss) income attributable to EZCORP, Inc.

Comprehensive income (loss) attributable to EZCORP, Inc.

$ 18,265 $ ( 84,141 ) $ ( 7,501 )

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Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Noncontrolling Interest Total Equity

(in thousands) Shares Par

Value Retained

(in thousands)

Balances as of October 1, 2018

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Taxes paid related to net share settlement of equity awards — — ( 3,288 ) — — — ( 3,288 )

Reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act — — — 1,455 ( 1,455 ) — —

Foreign currency translation (loss) gain — — — — ( 2,744 ) 106 ( 2,638 )

Equity classified conversion feature of 2024 Convertible Notes, net of tax — — 38,995 — — — 38,995

Net income (loss) — — — 37,282 — ( 988 ) 36,294

Balances as of September 30, 2018

54,585 $ 546 $ 397,927 $ 386,622 $ ( 42,356 ) $ ( 3,331 ) $ 739,408

Stock compensation — — 9,794 — — — 9,794

Release of restricted stock 950 10 — — — — 10

Taxes paid related to net share settlement of equity awards — — ( 3,288 ) — — — ( 3,288 )

Transfer of subsidiary shares to noncontrolling interest — — 3,195 — — ( 3,195 ) —

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55,303 $ 551 $ 398,475 $ 318,169 $ ( 68,068 ) $ — $ 649,127

Stock compensation — — 3,946 — — — 3,946

Transfer of consideration for current period acquisition 213 2 1,545 — — — 1,547

Transfer of consideration for prior period acquisition 33 — 185 — — — 185

Release of restricted stock 508 7 — — — — 7

Taxes paid related to net share settlement of equity awards — — ( 839 ) — — — ( 839 )

Foreign currency translation gain — — — — 9,653 — 9,653

Net income — — — 8,612 — — 8,612

Balances as of September 30, 2021

56,057 $ 560 $ 403,312 $ 326,781 $ ( 58,415 ) $ — $ 672,238

See accompanying notes to consolidated financial statements.

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Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

Operating activities:

Net (loss) income $ ( 68,463 ) $ 1,311 $ 36,294

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net income (loss) $ 8,612 $ ( 68,463 ) $ 1,311

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 30,672 30,827 28,797

Amortization of debt discount and deferred financing costs 13,797 13,200 19,759

Amortization of lease right-of-use asset 45,649 — —

Amortization of right-of-use asset 48,480 45,649 —

Accretion of notes receivable discount and deferred compensation fee — ( 821 ) ( 4,524 )

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Other adjustments ( 185 ) 1,652 5,776

Provision for inventory reserve ( 8,003 ) 2,577 536

Reserve on jewelry scrap receivable — — 3,646

Stock compensation expense 3,946 ( 5,094 ) 9,751

Equity in net loss (gain) from investment in unconsolidated affiliates 2,429 135 ( 5,529 )

Equity in net (income) loss from investment in unconsolidated affiliates ( 3,803 ) 2,429 135

Impairment of investment in unconsolidated affiliates — — 19,725

Changes in operating assets and liabilities, net of business acquisitions:

Pawn service charges receivable 11,021 ( 732 ) ( 1,788 )

Service charges and fees receivable ( 7,332 ) 11,021 ( 732 )

Inventory 371 14,466 ( 1,029 )

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Customer layaway deposits 1,256 ( 1,647 ) 1,176

Income taxes, net of excess tax benefit from stock compensation ( 4,715 ) ( 10,404 ) ( 3,785 )

Income taxes 2,180 ( 4,715 ) ( 10,404 )

Net cash provided by operating activities 46,438 49,078 103,517

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Acquisitions, net of cash acquired ( 19,015 ) — ( 8,116 )

Investment in unconsolidated affiliate — — ( 14,036 )

Principal collections on notes receivable — 8,000 34,067

Net cash provided by (used in) investing activities 109,898 ( 27,829 ) ( 134,206 )

Net cash (used in) provided by investing activities ( 84,611 ) 109,898 ( 27,829 )

Financing activities:

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Proceeds from borrowings, net of issuance costs — 912 1,064

Payments on borrowings ( 198 ) ( 196,093 ) ( 3,510 )

Payments on assumed debt and other borrowings ( 15,414 ) ( 198 ) ( 196,093 )

Repurchase of common stock — ( 5,158 ) —

Net cash (used in) provided by financing activities ( 6,253 ) ( 198,317 ) 167,588

Net cash used in financing activities ( 16,253 ) ( 6,253 ) ( 198,317 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash 5,497 ( 2,612 ) ( 507 )

Net increase (decrease) in cash and cash equivalents and restricted cash 150,111 ( 123,136 ) 121,709

Net (decrease) increase in cash and cash equivalents and restricted cash ( 48,929 ) 150,111 ( 123,136 )

Cash and cash equivalents and restricted cash at beginning of period 312,553 162,442 285,578

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Pawn loans forfeited and transferred to inventory $ 212,756 $ 241,252 $ 301,357

Transfer of consideration for current period acquisition 1,545 — —

Acquisition earn-out contingency 4,608 — —

Accrued acquisition consideration held as restricted cash 1,986 — —

See accompanying notes to consolidated financial statements.

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Description of Business

was founded in 1989 and is a leading provider of pawn loans in the United States and Latin America.

Pawn loans are non-recourse loans collateralized by tangible property.

We also sell merchandise, primarily collateral forfeited from pawn lending operations and used merchandise purchased from customers.

was founded in 1989 and is a leading provider of pawn services in the United States and Latin America.

At our pawn stores, we advance cash against the value of collateralized personal property.

We also sell merchandise, primarily collateral forfeited from pawn activities and pre-owned merchandise purchased from customers.

We are dedicated to satisfying the short-term cash needs of consumers, with a focus on delivering an industry-leading customer experience.

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• 516 United States pawn stores (operating primarily as EZPAWN or Value Pawn & Jewelry);

• 368 Mexico pawn stores (operating primarily as Empeño Fácil);

• 132 pawn stores in Guatemala, El Salvador, Honduras and Peru (operating as GuatePrenda and MaxiEfectivo).

We have a 34.75 % equity interest in Cash Converters International Limited (“Cash Converters International”), a publicly traded company (ASX:CCV) headquartered in Perth, Western Australia with operations in Australia and the United Kingdom.

Cash Converters International and its controlled companies comprise a diverse group generating revenues from franchising store operations, personal finance and vehicle finance, controlling over 700 stores across 16 countries.

• 508 Mexico pawn stores (operating primarily as Empeño Fácil and Cash Apoyo Efectivo);

• 124 pawn stores in Guatemala, El Salvador and Honduras (operating as GuatePrenda and MaxiEfectivo).

We have an equity interest ( 35.65 % as of September 30, 2021) in Cash Converters International Limited (“Cash Converters”), a publicly traded company (ASX:CCV) headquartered in Perth, Western Australia.

Cash Converters and its controlled companies comprise a diverse group generating revenues from franchising, store operations, personal finance (including pawn transactions) and vehicle finance, controlling over 700 stores across 15 countries.

Subsequent Events .

We also own 13.14 % of Rich Data Corporation (“RDC”), a Singapore-based software-as-a-service company that utilizes global financial services expertise, advanced artificial intelligence and non-traditional data to deliver a next-generation credit scoring and decisioning platform.

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They include the accounts of EZCORP, Inc., and its wholly-owned subsidiaries.

We use the equity method of accounting for entities in which we have a 50% or less investment and exercise significant influence.

We account for equity investments for which we do not have significant influence and without readily determinable fair values at cost with adjustments for observable changes in price in orderly transactions for identical or similar investments of the same issuer or impairments.

We use the equity method of accounting for entities over which we exercise significant influence, but in which we have a 50% or less investment.

We account for equity investments in entities over which we do not exercise significant influence, and do not have a readily determinable fair value, at cost.

If we obtain evidence the fair value of such an investment has declined below its cost, we reduce the recorded cost to the lower value through an impairment charge recorded in the Consolidated Statements of Operations.

All inter-company accounts and transactions have been eliminated in consolidation.

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We regularly evaluate estimates and judgments, including those related to revenue recognition, inventory, loan loss allowances, long-lived and intangible assets, share-based compensation, income taxes, contingencies and litigation.

We base our estimates on historical experience, observable trends and various other assumptions that we believe are reasonable, the results of which form the basis for making judgements about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

We base our estimates on historical experience, observable trends and various other assumptions we believe are reasonable, the results of which form the basis for making judgements about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

Actual results may differ materially from the estimates under different assumptions or conditions.

Pawn Loans and Revenue Recognition

The carrying value of our pawn loans is based on the initial amounts loaned to customers, which are fully collateralized.

We record pawn service charges using the effective interest method over the life of the loan for all pawn loans we believe to be collectible.

We base our estimate of collectible loans on several inputs, including recent redemption rates, historical trends in redemption rates and the amount of loans due in the following months.

Unexpected variations in any of these factors could change our estimate of collectible loans, affecting our results of operations and financial condition.

If a pawn loan is not repaid, we value the forfeited collateral (inventory) at the lower of cost (pawn loan principal) or net realizable value of the item.

Our pawn loans are fully collateralized and the carrying values are based on the initial amounts loaned to customers.

We record pawn service charges using the effective interest method over the life of the pawn loans for all pawn loans we believe to be collectible.

We base our estimate of collectability on several inputs, including recent redemption rates, historical trends in redemption rates and the amount of loans due in the following months.

Unexpected variations in any of these factors could change our estimate of collectibality and affect our results of operations and financial condition.

If a pawn loan is not repaid, the forfeited collateral is recorded as inventory at the lower of the principal balance of the pawn loan or the net realizable value of the item.

Of our consolidated pawn loans outstanding balance of $ 175.9 million as of September 30, 2021, $ 63.9 million ( 36 %) is attributable to stores in Texas and $ 19.8 million ( 11 %) is attributable to stores in Florida.

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Our performance obligations for merchandise sales primarily relate to point in time retail sales in our stores.

We recognize the satisfaction of the performance obligation and record merchandise sales revenue and the related cost when merchandise inventory is sold and delivered to the customer or, in the case of a layaway sale, when we receive the final payment.

We recognize the satisfaction of the performance obligations and record merchandise sales revenue and the related costs when merchandise inventory is sold and delivered to the customer or, in the case of a layaway sale, when we receive the final payment.

Customers have a limited period of time to return merchandise for a refund or exchange, and actual returns for refunds are not material.

Sales tax collected on the sale of inventory is excluded from the amount recognized as sales and is recorded as a liability in “Accounts payable, accrued expenses and other current liabilities” in our consolidated balance sheets until remitted to the appropriate governmental authorities.

We recognize the satisfaction of the performance obligation and record scrapping (precious metals and stones) sales revenue and the related cost when scrap inventory is legally transferred to the refiner and the refiner obtains control of the inventory.

The receivables outstanding at the end of a given reporting period are not material.

Payment of the receivable from the customer is generally received within a short period of time after the legal transfer of the scrap materials to the refiner.

Sales taxes collected on sales of inventory are excluded from the amounts recognized as merchandise sales and are recorded as “Accounts payable, accrued expenses and other current liabilities” in our Consolidated Balance Sheets until remitted to the appropriate governmental authorities.

For precious metals and stones sold as scrap, we recognize the satisfaction of the performance obligations and record the revenues and the related costs when the inventory is legally transferred to the refiner and the refiner obtains control of the inventory.

The accounts receivable outstanding at the end of a given reporting period from such transactions are not material as payments are generally received within a short period of time after the legal transfer of the inventory.

Our transaction prices are explicitly stated within the contracts with our customers.

Inventory and Cost of Goods Sold

If a pawn loan is not redeemed, we record the forfeited collateral at cost (the principal amount of the pawn loan) in "Inventory, net" in our consolidated balance sheets.

We do not record loan loss allowances or charge-offs on the principal portion of pawn loans, as they are fully collateralized.

We record our inventory using the specific identification method of accounting.

In order to state inventory at the lower of cost or net realizable value, we record an allowance for excess, obsolete or slow-moving inventory based on the type and age of merchandise.

If a pawn loan is not redeemed, the forfeited collateral is recorded as inventory at the lower of the principal balance of the pawn loan or the net realizable value of the item.

We do not record a loan loss allowance or charge-off expense on the principal portion of forfeited pawn loans, as such loans are fully collateralized.

Inventory is recorded using the specific identification method of accounting.

In order to state inventory at the lower of cost or net realizable value, we record an allowance for excess, obsolete or slow-moving inventory based on the type and age of the underlying merchandise.

Our inventory consists primarily of general merchandise and jewelry.

Our "Merchandise cost of goods sold" includes the historical cost of inventory sold, inventory shrinkage and any change in the allowance for inventory shrinkage and valuation.

We include the cost of operating our central jewelry processing unit under “Jewelry scrapping cost of goods sold,” as it relates directly to sales of precious metals to refiners.

We consider our estimates of obsolete or slow-moving inventory and shrinkage critical estimates in determining the appropriate overall valuation allowance for inventory.

We monitor our sales margins for each type of inventory on an ongoing basis and compare to historical margins.

“Merchandise cost of goods sold" as recorded in our Consolidated Statements of Operations includes the historical cost of inventory sold, inventory shrinkage and any change in the allowance for inventory shrinkage and valuation.

We include the costs of operating our central jewelry processing unit as “Jewelry scrapping cost of goods sold” in our Consolidated Statements of Operations as such costs relate directly to sales of precious metals and stones to refiners.

We consider our estimates of obsolete or slow-moving inventory and shrinkage critical to the determination of the appropriate overall valuation allowance for inventory.

We continually monitor our sales margins for each type of inventory and compare the current margins to historical margins.

Significant variances in those margins may require a revision to future inventory reserve estimates.

We monitor our reserve estimates pertaining to jewelry inventory depending on the current and projected prices of gold.

Future declines in the value of gold prices may cause an increase in reserve rates pertaining to jewelry inventory.

We determine our reserve estimates pertaining to jewelry inventory based on the current and projected prices of gold.

Future declines in the value of gold may result in an increase in reserves pertaining to jewelry inventory.

Situations that may result in excess or obsolete inventory include changes in business and economic conditions, changes in consumer confidence caused by changes in market conditions, decreases in demand for our products or inventory obsolescence resulting from changes in technology.

During fiscal 2020, we took a charge of $ 2.6 million to merchandise cost of sales for inventory provisions primarily related to the write-off of excess and obsolete inventory due to the impact of COVID-19.

Included in “Merchandise cost of goods sold” during fiscal 2020, is $ 2.6 million of expense for inventory provisions primarily related to the write-off of excess and obsolete inventory due to the impacts of COVID-19.

Such charges were not material during fiscal 2021.

With respect to our Mexico pawn operations, we do not own the forfeited collateral.

however, we assume the risk of loss on such collateral and are solely responsible for its care and disposition and, therefore, record such collateral under “Inventory, net” in our consolidated bal ance sheets.

The amount of inventory from our Mexico pawn operations classified as “Inventory, net” in our consolidated balance sheets was $ 12.9 million and $ 26.9 million as of September 30, 2020 and 2019, respectively.

However, we assume the risk of loss on such collateral and are solely responsible for its care and disposition and, therefore, record such collateral as inventory in our Consolidated Balance Sheets.

As of September 30, 2021 and 2020, respectively, $ 22.6 million and $ 12.9 million of the balance recorded as inventory in our Consolidated Balance Sheets was from our Mexico pawn operations.

Cash and Cash Equivalents and Cash Concentrations

Cash and cash equivalents consist primarily of cash on deposit or highly liquid investments with original contractual maturities of three months or less, or money market mutual funds.

We hold cash at major financial institutions that often exceed FDIC insured limits.

We manage our credit risk associated with cash and cash equivalents and cash concentrations by concentrating our cash deposits in high quality financial institutions and by periodically evaluating the credit quality of the primary financial institutions issuing investments or holding such deposits.

We hold cash at major financial institutions in amounts that often exceed FDIC insured limits.

We manage our credit risk associated with cash and cash equivalents and cash concentrations by maintaining our cash deposits in high quality financial institutions and by periodically evaluating the credit quality of the primary financial institutions issuing investments or holding such deposits.

Historically, we have not experienced any losses due to such cash concentrations.

Restricted Cash

Restricted cash consists of $ 8.0 million held in escrow pending resolution of a pre-closing tax indemnity claim related to the sale of Grupo Finmart.

Restricted cash consists of $ 8.0 million held in escrow pending the resolution of a pre-closing tax indemnity claim related to the sale of Grupo Finmart and $ 2.0 million related to the acquisition of PLO del Bajio S.

as discussed in Note 3:

Acquisitions.

Equity Method Investments

We account for our investment in Cash Converters International and RDC under the equity method.

Since Cash Converters International’s fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag.

Thus, income reported for fiscal years ended September 30, 2020, 2019 and 2018 represents our percentage interest in the results of Cash Converters International’s operations for the twelve-month periods ended June 30, 2020, 2019 and 2018, respectively.

Because Cash Converters International publicly files semi-annual financial reports with the Australian Securities & Investments Commission as of and for the periods ended June 30 and December 31, we make estimates for our equity in Cash Converters International’s net income (loss) for the three-month periods ended March 31 (our reporting period ended June 30) and September 30 (our reporting period ended December 31).

Those estimates may vary from actual results.

We adjust our estimates as necessary in our reporting periods ended March 31 and September 30 to conform to Cash Converters International actual results as shown in their published semi-annual reports.

We measure and record all other-than-temporary impairments as of the date of our reporting period.

We account for our investment in Cash Converters and RDC under the equity method.

Because the fiscal year of Cash Converters ends three months before our fiscal year, we record our interest from the results of Cash Converters on a three-month lag.

Thus, the results of our operations reported for the fiscal years ended September 30, 2021, 2020 and 2019 include our percentage interest in the results of Cash Converters for the twelve-month periods ended June 30, 2021, 2020 and 2019, respectively.

We record our percentage interest in the results of Cash Converters for the three months ended June 30 based on an estimate of the results of Cash Converters for the three months ended March 31 of that year.

Similarly, we record our percentage interest in the results of Cash Converters for the three months ended December 31 using the estimated results of Cash Converters for the three months ended September 30 of that year.

Cash Converters files semi-annual financial reports with the Australian Securities & Investments Commission and the Australian Stock Exchange as of and for the periods ended June 30 and December 31.

We use these publicly available financial reports to adjust the estimated amounts we recorded.

The actual results of Cash Converters may vary from our estimates.

We enter into operating lease agreements for real estate related to pawn locations and corporate offices.

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Our lease terms include options to extend the lease when it is reasonably certain we will exercise its option.

We used incremental borrowing rates that match the duration of the remaining lease terms of our operating leases on a fully collateralized basis upon adoption as of October 1, 2019 to initially measure our lease liability.

We used incremental borrowing rates that match the duration of the remaining lease terms of our operating leases on a fully collateralized basis to initially measure our lease liability.

We evaluate renewal options periodically for any changes in assumptions.

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Right-of-use assets are tested for impairment in the same manner as long-lived assets.

Under ASC 842, lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred.

Our lease portfolio consists of pawn locations and corporate offices with leases terms ranging from three to ten years , including options to renew.

We recognize lease expense on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred.

Our lease portfolio consists of pawn locations and corporate offices with lease terms ranging from three to ten years , including options to renew.

We generally account for the initial lease term of our pawn locations as up to ten years .

Our primary corporate office is leased through March 2029 with escalating rent payments annually and includes two five-year extension options at the end of the initial lease term.

Definite-lived Intangible Assets

Goodwill and indefinite-lived intangible assets are not subject to amortization.

We test goodwill and indefinite-lived intangible assets for impairment annually as of September 30, or more frequently if an event occurs or circumstances change that could indicate a potential impairment.

We compare the fair value of our reporting units with their carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, without exceeding the total amount of goodwill allocated to that reporting unit.

We perform our impairment analyses utilizing the income approach.

This approach uses estimated future cash flows and terminal values for each of our reporting units (discounted using a market participant perspective) to determine the fair value of each reporting unit, which is then compared to the carrying value of the reporting unit to determine if there is an impairment.

We have determined that our reporting units are equivalent to our operating segments for fiscal 2020.

The income approach includes assumptions about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average cost of capital derived from other publicly traded companies that are similar but not identical from an operational and economic standpoint.

Our primary corporate office is leased through March 2029 with annual escalating rent payments and includes two , five-year extension options at the end of the initial lease term.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value.

We evaluate goodwill for impairment annually on September 30 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired.

We consider the assessment of the occurrence of triggering events or substantive changes in circumstances that may indicate the fair value of goodwill may be impaired to be a critical estimate.

Impairment of goodwill is tested at the reporting unit level.

A reporting unit is an operating segment or one level below an operating segment, referred to as a “component.” A component of an operating segment is required to be identified as a reporting unit if the component is a business for which discrete financial information is available and segment management regularly reviews its operating results.

When testing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not the estimated fair value of a reporting unit is less than its carrying amount.

If we elect to perform a qualitative assessment and determine that an impairment is more-likely-than-not, we are then required to perform a quantitative impairment test;

otherwise, no further analysis is required.

We also may elect not to perform a qualitative assessment and, instead, proceed directly to a quantitative impairment test.

When performing a quantitative impairment test, we apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

When we perform a quantitative goodwill impairment test, we estimate the fair value of the reporting unit using an income approach based on the present value of expected future cash flows, including terminal value, utilizing a market-based weighted average cost of capital (“WACC”) determined separately for each reporting unit.

The determination of fair value involves the use of estimates and assumptions, including revenue growth rates, operating margins and terminal growth rates discounted by an estimated WACC derived from other publicly traded

companies that are similar but not identical to us from an operational and economic standpoint.

We use discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in our internally developed forecasts.

Discount rates used in fiscal 2020 for the goodwill impairment analysis ranged from 11 % to 19 %.

In testing other indefinite-lived intangible assets for potential impairment, we apply key assumptions that are consistent with those utilized in our goodwill impairment test.

We may perform a qualitative assessment in making our determination of whether it is more likely than not goodwill and other indefinite-lived intangible assets are impaired in future reporting periods.

In addition to the assumptions discussed above pertaining to the income approach, we consider the assessment of potential triggering events to be a critical estimate.

We test indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test.

If we believe as a result of its qualitative assessment that it is more-likely-than-not the fair value of the indefinite-lived intangible asset is less than its carrying amount, a quantitative impairment test is required.

Otherwise, no further testing is required.

Property and Equipment

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Valuation of Long-Lived Assets

The carrying values of long-lived assets, inclusive of right of use (ROU) assets, are periodically reviewed whenever events or changes in circumstances indicate that the carrying value may not be recoverable, such as historical operating losses or plans to close stores before the end of their previously estimated useful lives.

The carrying values of long-lived assets, inclusive of right of use (ROU) assets, are periodically reviewed whenever events or changes in circumstances indicate the carrying value may not be recoverable, such as historical operating losses or plans to close stores before the end of their previously estimated useful lives.

A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets.

The estimate of cash flows includes management's assumptions of cash inflows and outflows directly resulting from the use of those assets in operations.

In addition to the assumptions associated with the determination of projected future cash flows, we consider the assessment of potential triggering events to be a critical estimate.

We consider the assumptions associated with the determination of projected future cash flows to be a critical estimate.

When a potential impairment has occurred, an impairment write-down is recorded if the carrying value of the long-lived asset exceeds its fair value.

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These gains were $ 0.1 million, $ 0.5 million and $ 0.3 million for fiscal 2021, 2020 and 2019, respectively.

Operations Expense

Included in “Operations” expense are costs related to operating our stores and any direct costs of support offices.

Store Expenses

Included in “Store expenses” are costs related to operating our stores and any direct costs of support offices.

These costs include labor, other direct expenses such as utilities, supplies and banking fees and indirect expenses such as store rent, building repairs and maintenance, advertising, store property taxes and insurance and regional and area management expenses .

Administrative Expense

Included in “Administrative” expense are costs related to our executive and administrative offices.

General and Administrative Expense

Included in “General and administrative” expense are costs related to our executive and administrative offices.

This includes executive and administrative salaries, wages, stock and incentive compensation, professional fees, license fees, costs related to the operation of our administrative offices such as rent, property taxes, insurance, information technology and other corporate costs.

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Impact of COVID-19

In December 2019, a novel strain of coronavirus “COVID-19” was identified in Wuhan, China.

COVID-19 has caused a global health emergency and was declared a worldwide pandemic by the World Health Organization on March 11, 2020.

In an effort to slow and contain the spread of COVID-19, local, state and national governments implemented various measures, which have impacted businesses worldwide.

Many of these measures have expired or been rescinded, but some are continuing and others are being reimplemented or considered for reimplementation as COVID-19 continues to spread at rapid rates in many parts of the U.S.

We began to see the impact of COVID-19 to our operations in mid-March when the closure of non-essential businesses and the implementation of stay-at-home requirements began in our geographic locations.

During the third quarter, we were able to keep virtually all of our stores in the U.S.

and Mexico open for business and operating under enhanced safety measures and restrictions on occupancy, but store closure orders in our GPMX countries (Guatemala, El Salvador, Honduras and Peru) had a more severe impact on our business.

Since that time and continuing through the fourth quarter, we have been able to keep virtually all of our stores open for business.

Starting in mid-March and continuing through most of the fourth quarter, we experienced a significant decline in pawn loan originations and associated loan balances as a result of a change in customer borrowing behaviors due to COVID-19.

This reduced activity resulted in net revenue losses for the year, which were partially offset by a strong increase in merchandise sales.

The factors described above impacted the forecast of future net revenues and earnings and resulted in lower present value of future cash flows.

We recorded a goodwill impairment charge of $ 41.3 million in the second quarter of fiscal 2020.

In addition, we (a) determined an impairment had occurred in the fair values of trade names of previously acquired entities in our Mexico and GPMX reporting units and recorded a related impairment of $ 2.9 million and $ 1.7 million respectively, and (b) determined the carrying amount of certain long-lived asset groups were not recoverable and recorded a related impairment of $ 1.1 million, all in the second quarter of 2020.

The full extent and duration of the COVID-19 impact on the global economy generally, and on our business specifically, is currently unknown and cannot be reasonably estimated.

The pandemic has had an adverse effect on our net revenues and earnings in fiscal 2020.

We expect the impact of the pandemic, and the recovery therefrom, will continue to adversely affect net revenues and earnings into fiscal 2021.

A prolonged pandemic and recovery may have an adverse effect on our results of operations, financial position and liquidity in future periods.

The COVID-19 pandemic continues to affect the U.S.

and global economies, and as previously disclosed in our 2020 Annual Report, the pandemic also affected our businesses in a variety of ways beginning in the second quarter of fiscal 2020 and continuing into fiscal 2021.

We cannot estimate the length or severity of the COVID-19 pandemic or the related financial consequences on our business and operations, including whether and when historic economic and operating conditions will resume or the extent to which the disruption may impact our business, financial position, results of operations or cash flows.

Our estimates, judgments and assumptions related to COVID-19 could ultimately differ over time.

Recently Adopted Accounting Policies

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”).

ASU 2016-13 modifies the measurement of expected credit losses of certain financial instruments, requiring entities to estimate an expected lifetime credit loss on financial assets.

The ASU amends the impairment model to utilize an expected loss methodology and replaces the incurred loss methodology for financial instruments including trade receivables.

The amendment requires entities to consider other factors, such as historical loss experience, current conditions and reasonable and supportable forecasts.

ASU 2016-13 was effective on October 1, 2020.

We adopted ASU 2016-13 effective October 1, 2020 using the modified retrospective approach.

There was no net cumulative effect adjustment to retained earnings as of October 1, 2020 as a result of this adoption.

This amendment did not have a material impact on our balance sheets or cash flows from operations and did not have a material impact on our operating results.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform ( Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-004”).

ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate.

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We will continue to assess the applicability to any future arrangements.

Effective October 1, 2019, we adopted ASC - Leases (Topic 842) which requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet using the modified retrospective method provided under ASU 2018-11, Leases- (Topic 842):

Targeted Improvements.

Additionally, we elected the package of practical expedients under Accounting Standards Codification ("ASC") 842 as well as the transition guidance elections to not separate lease and non-lease components for leases under ASC 842.

Effective October 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842, Leases, which requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet using the modified retrospective method provided under ASU 2018-11, Leases (Topic 842) — Targeted Improvements .

Additionally, we elected the package of practical expedients under ASC 842 as well as the transition guidance elections to not separate lease and non-lease components for leases under ASC 842.

Further, we have elected an accounting policy to not record right-of-use assets and lease liabilities for leases that have a duration of 12 months or less.

See Note 12 for additional discussion.

Leases for additional discussion.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued its Accounting Standards Update (“ASU”) 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40), (“ASU 2020-06”).

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) , (“ASU 2020-06”).

ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

The ASU 2020-06 amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

2020-06 amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

We are assessing the amendments in ASU 2020-06 to determine the impact on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326) (ASU 2016-13).

ASU 2016-13 modifies the measurement of expected credit losses of certain financial instruments, requiring entities to estimate an expected lifetime credit loss on financial assets.

The ASU amends the impairment model to utilize an expected loss methodology and replaces the incurred loss methodology for financial instruments including trade receivables.

The amendment requires entities to consider other factors, such as economic conditions and future economic conditions.

A reporting entity should generally apply the amendment on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the amendment is effective.

We are still assessing the amendments in ASU 2016-13 and do not expect the amendments will have a significant impact on our consolidated financial statements and related disclosures.

ASU 2016-13 is effective for the first quarter of fiscal 2021 .

We plan to early adopt this standard as of October 1, 2021 under the modified retrospective basis.

Under this transition method, prior period financial information and disclosures will not be adjusted and will continue to be reported under the accounting standards that were in effect prior to our adoption of ASU 2020-06.

The cash conversion model, which the Company has historically used to account for its convertible debt instruments, was eliminated by ASU 2020-06.The adoption of ASU 2020-06 will reduce non-cash interest expense in future periods due to the derecognition of the debt discount associated with the bifurcated equity component of our convertible notes.

The treasury stock method for calculating earnings per share will no longer be allowed for convertible debt instruments whose principal amount may be settled using shares, instead the if-converted method will be required to determine the dilutive effect of our convertible notes.

OTHER CHARGES

Strategic Initiatives .

During the fourth quarter of fiscal 2020, we began to implement strategic initiatives to refocus on our core pawn business and optimize our cost structure in order to improve our bottom line performance and position the Company for sustainable growth.

The initiatives focused on workforce reductions, closure of our CASHMAX operations, store closures and write-offs of other miscellaneous charges.

Charges and adjustments related to our initiatives are summarized below:

The initiatives focused on workforce reductions, closure of our CASHMAX operations, store closures, write-offs and other miscellaneous charges.

We recorded $ 0.2 million of charges for the fiscal year ended September 30, 2021 related to the closure of store operations in Peru.

(in thousands) Accrued Charges at September 30, 2020 Charges Payments and Adjustments Accrued Charges at September 30, 2021

Cash charges:

Labor reduction costs $ 5,946 $ — $ 5,623 $ 323

CASHMAX shutdown costs 800 — 800 —

Store closure costs 1,806 229 1,806 229

Other 2,166 — 166 2,000

$ 10,718 $ 229 $ 8,395 $ 2,552

We recorded $ 20.4 million of charges for the fiscal year ended September 30, 2020, as summarized below:

• $ 6.4 million in severance and other payroll-related costs related to a headcount reduction in the corporate office;

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• $ 5.0 million in other miscellaneous charges, primarily consisting of impairment of internally developed software and contract termination costs.

(in millions) Accrued Charges at September 30, 2019 Charges and Adjustments Payments and Adjustments Accrued Charges at September 30, 2020

(in thousands) Accrued Charges at September 30, 2019 Charges Payments and Adjustments Accrued Charges at September 30, 2020

Cash charges:

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Fiscal 2021 Acquisitions

In June 2019, we acquired assets related to seven pawn stores operating under the name "Metro Pawn" in Nevada, entering the Reno market and expanding our presence in the Las Vegas metropolitan area, for an aggregate purchase price of $ 7.0 million in cash, of which $ 3.9 million was recorded as goodwill.

In December 2018, we acquired assets related to five pawn stores in Mexico for an aggregate purchase price of $ 0.3 million in cash, of which $ 0.1 million was recorded as goodwill.

Substantially all goodwill attributable to the fiscal 2019 acquisitions is deductible for tax purposes.

We have concluded these acquisitions were immaterial to our overall consolidated financial results and, therefore, have omitted information that would otherwise be required.

Fiscal 2018 Acquisitions

Camira Administration Corp.

and subsidiaries (“GPMX”)

In October 2017, we completed the acquisition of 100 % of the outstanding stock of Camira Administration Corp.

and subsidiaries (“GPMX”), a business that, at the time, owned and operated 112 stores located in Guatemala, El Salvador, Honduras and Peru.

The GPMX acquisition significantly expanded our store base into Latin American countries outside of Mexico and provided us with a platform for further growth in the region.

Under the terms of the stock purchase agreement (“SPA”), we paid $ 53.4 million in cash upon closing and, subsequent to the closing, paid $ 6.7 million to satisfy the acquired company's indebtedness to members of the seller’s affiliated group.

The SPA specified a further $ 2.25 million to be paid contingent upon performance of GPMX’s business during a period up to 24 months following the closing date, and the business achieved the specified performance goal during the first quarter of fiscal 2018.

Consequently, we made a final payment of $ 1.6 million in January 2018 in satisfaction of the contingent purchase price obligation, after reduction for certain adjustments under the SPA, yielding a total purchase price of $ 61.7 million.

In June 2018, we acquired 40 pawn stores operating under the name “Montepio San Patricio” in and around Mexico City, the largest market in Mexico.

The acquisition of these stores was our largest acquisition in Mexico to date and significantly strengthened our competitive position in the strategically important Mexico City metropolitan area.

The physical space in these stores is substantially larger than our average store in Mexico, giving us the capacity to increase their focus on general merchandise pawn loan and retail activities.

In June 2018, we acquired 23 pawn stores operating under the name “Presta Dinero,” giving us a presence in a number of cities within seven central-Mexico states in which we already had stores.

These stores complemented our existing stores, allowing us to achieve synergies in management and administration while giving us a presence in new cities and neighborhoods.

In December 2017, we acquired 21 pawn stores located in the Mexican state of Sinaloa operating under the name “Bazareño.” The Bazareño stores made up the largest chain of pawn stores in Culiacan, the capital city of Sinaloa, giving us the number one position in that market and an important strategic presence in the northwest region of Mexico.

The purchase prices of the above acquisitions were paid in cash.

These acquisitions, collectively referred to as "All Other" below, were individually immaterial and we have therefore omitted or aggregated certain disclosures.

Other Information for Fiscal 2018 Acquisitions

The acquisitions described above were all attributable to our Latin America Pawn segment.

The allocation of the consideration for the acquired net assets from our fiscal 2018 acquisitions was as follows:

GPMX All Other

(in thousands)

On June 8, 2021, we completed the acquisition of 100 % of the common shares of PLO del Bajio S.

(“Bajio”) and gained control of the entity, further expanding our geographic footprint within Mexico with the addition of 128 pawn stores.

These stores operate under the name "Cash Apoyo Efectivo" and are located principally in the Mexico City metropolitan area.

The total consideration for Bajio was $ 23.6 million, consisting of $ 17.4 million of cash, and 212,870 shares of our Class A Non-Voting Common Stock valued at $ 1.6 million.

In addition, t he sellers are entitled to additional payments of up to $ 4.6 million to be paid in two payments over the next two years , contingent on the growth of the loan portfolios of the acquired stores.

Up to 50 % of any future contingent payments can be made in shares of our Class A Non-Voting Common Stock at our discretion.

The value of the contingent consideration was included in the total consideration as the metrics were considered achievable on the date of acquisition.

Cash paid at closing was $ 11.6 million and $ 3.8 million was paid in the fourth quarter of the fiscal year.

Of the remaining $ 2.0 million, $ 1.6 million is expected to be paid prior to June 30, 2022, and $ 0.4 million is expected to be paid on or around the fifth anniversary of the date of acquisition .

The assets acquired and liabilities assumed are based upon the estimated fair values at the date of acquisition.

The excess purchase price over the estimated fair market value of the new assets acquired has been recorded as goodwill.

The purchase price allocation is as follows, in thousands:

Cash and cash equivalents $ 308

Earning assets 17,247 8,347

Other assets 2,145 3,737

Property and equipment, intangible assets, deferred taxes and other assets, net* 11,671 13,678

Pawn loans 4,619

Pawn service charges receivable 1,335

Inventory 1,319

Property and equipment 2,025

Right-of-use assets 10,651

Goodwill 26,100

Accounts payable, deferred taxes and other liabilities ( 6,723 ) 1,621

Intangible assets 3,965

Deferred tax asset, net 381

Other assets 746

Accounts payable, accrued expenses and other liabilities ( 2,290 )

Debt ( 14,931 )

Lease liabilities ( 10,651 )

Total consideration $ 23,577

* As September 30, 2018 i ntangible assets consist primarily of $ 9.8 million and $ 6.6 million in trade names acquired with indefinite useful lives, for GPMX and All Other, respectively.

The factors contributing to the recognition of goodwill, which is recorded in our Latin America Pawn segment, were based on several strategic and synergistic benefits we expect to realize from the acquisitions, including expansion of our store base as well as the ability to further leverage our pawn expertise, investments in information technology and other back office and support functions of our existing Mexico pawn business.

None of the goodwill resulting from these business combinations is deductible for tax purposes.

The results of the acquired businesses have been included in our consolidated financial statements beginning after the acquisition dates as indicated above in our Latin America Pawn segment with revenue and net income amounts as presented below.

Such net income does not include acquisition-related costs of approximately $ 0.6 million for fiscal 2018, which were expensed as incurred and primarily included under “Administrative” expense in our consolidated statements of operations.

It is impracticable to provide historical supplemental pro forma financial information for GPMX and All Other acquisitions due to a variety of factors, including complexity of restructured entities acquired and access to historical information, such as information necessary to eliminate intercompany transactions.

Fiscal Year Ended

September 30, 2018

Revenue Net Income

GPMX $ 46.5 $ 8.0

All Other 7.5 1.3

(LOSS) EARNINGS PER SHARE

Components of basic and diluted (loss) earnings per share and excluded antidilutive potential common shares are as follows:

Intangible assets acquired consist of indefinite-lived trade names.

The factors contributing to the recognition of goodwill, which is recorded in our Latin America Pawn segment, were based on several strategic and synergistic benefits we expect to realize from the acquisition, including expansion of our store base as well as the ability to further leverage our pawn expertise, investments in information technology and other back office and support functions of our existing Mexico pawn business.

We expect none of the goodwill resulting from this business combination will be deductible for income tax purposes.

The results of Bajio have been included in our condensed consolidated financial statements from the date of acquisition in our Latin America Pawn segment.

The acquired business contributed revenues of $ 9.6 million and net loss of $ 0.1 million during the period subsequent to acquisition.

On June 9, 2021, we repaid $ 14.9 million of Bajio’s existing debt assumed in the acquisition.

The following unaudited pro forma summary presents consolidated information for us as if the business combination had occurred on October 1, 2019.

The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results.

The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, nor does it reflect additional revenue opportunities following the acquisition.

The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed.

Fiscal Years Ended September 30,

(in thousands, except per share amounts) 2021 2020

Revenue $ 748,957 $ 854,926

Net income (loss) $ 8,828 $ ( 65,206 )

Basic earnings (loss) per common share $ 0.16 $ ( 1.18 )

Diluted earnings (loss) per common share $ 0.16 $ ( 1.18 )

We did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma net revenue and net income.

During the fiscal year end ended September 30, 2021, we incurred total acquisition-related costs of $ 0.8 million.

The acquisition-related costs were primarily related to legal, accounting and consulting services and were expensed as incurred through September 30, 2021, and are included in general and administrative expenses in the Consolidated Statements of Operations.

In May 2021, we acquired substantially all of the assets associated with 11 pawn stores in the Houston, Texas area, enhancing our position in this strategically important market.

We have concluded that this acquisition was immaterial to our overall consolidated financial position and consolidated results of operations, and, therefore, have omitted information that would otherwise be required.

EARNINGS (LOSS) PER SHARE

The following table reconciles the number of common shares used to compute basic and diluted earnings per share attributable to EZCORP Inc., shareholders:

Fiscal Year Ended September 30,

2020 2019 2018

(in thousands, except per share amounts) 2021 2020 2019

Net (loss) income from continuing operations attributable to EZCORP (A) $ ( 68,463 ) $ 2,998 $ 38,138

Loss from discontinued operations, net of tax (B) — ( 457 ) ( 856 )

Net (loss) income attributable to EZCORP (C) $ ( 68,463 ) $ 2,541 $ 37,282

Weighted average outstanding shares of common stock (D) 55,313 55,341 54,456

Net income (loss) $ 8,612 $ ( 68,463 ) $ 2,541

Earnings per common share

Average common share outstanding (denominator) 55,744 55,313 55,341

Earnings (loss) per common share $ 0.15 $ ( 1.24 ) $ 0.05

Diluted earnings per common share

Average common share outstanding 55,744 55,313 55,341

Dilutive effect of restricted stock and convertible notes* 205 — 643

Weighted average common stock and common stock equivalents (E) $ 55,313 $ 55,984 $ 57,896

Basic (loss) earnings per share attributable to EZCORP:

Continuing operations (A/E) $ ( 1.24 ) $ 0.05 $ 0.70

Discontinued operations (B / D) — ( 0.01 ) ( 0.02 )

$ ( 1.24 ) $ 0.04 $ 0.68

Diluted (loss) earnings per share attributable to EZCORP:

Continuing operations (A / E) $ ( 1.24 ) $ 0.05 $ 0.66

Discontinued operations (B / E) — ( 0.01 ) ( 0.02 )

Diluted (loss) earnings per share (C / E) $ ( 1.24 ) $ 0.04 $ 0.64

Diluted average common shares outstanding (denominator) 55,949 55,313 55,984

Diluted earnings (loss) per common share $ 0.15 $ ( 1.24 ) $ 0.05

Potential common shares excluded from the calculation of diluted earnings per share above:

Restricted stock** 1,233 2,786 2,121

* See Note 9 for discussion of the terms and conditions of the potential impact of the 2024 Convertible Notes and 2025 Convertible Notes.

* Includes time-based share-based awards and performance-based restricted stock units.

Debt for discussion of the terms and conditions of the potential impact of the 2024 Convertible Notes and 2025 Convertible Notes.

There is no dilutive impact for the Convertible Notes for the periods presented.

This amount excludes all potential common shares for periods when there is a loss from continuing operations.

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STRATEGIC INVESTMENTS

As of September 30, 2020, we owned 214,183,714 shares, or approximately 34.75 %, of Cash Converters International.

Our total investment in Cash Converters International was acquired between November 2009 and June 2018 for approximately $ 96.1 million, including the acquisition of 57,631,230 shares in June 2018 for $ 14.0 million (increasing our ownership by three percentage points) in connection with an underwritten placement of 123.3 million shares by Cash Converters International for AUD $ 39.5 million, excluding related costs.

Our equity in Cash Converters International’s net loss was $ 2.1 million and $ 0.1 million in fiscal 2020 and 2019, and our equity in net income was $ 5.5 million in 2018.

Cash Converters International did not declare or pay a dividend in fiscal 2020, 2019 or 2018.

Cash Converters International’s accumulated undistributed after-tax earnings included in our consolidated retained earnings were $ 13.7 million as of September 30, 2020.

The following tables present summary financial information for Cash Converters International’s most recently reported results as of September 30, 2020, 2019 and 2018 as applicable after translation to U.S.

As of September 30, 2021, we owned 223,702,991 shares, or approximately 35.65 %, of Cash Converters.

We acquired our original investment (representing approximately 30 % of the outstanding shares) in November 2009 and have increased our ownership through the acquisition of additional shares periodically since that time.

In April 2021, we acquired 9,519,277 shares through the Cash Converters Dividend Reinvestment Plan, bringing our total ownership to 35.65 % as indicated above.

Since September 30 2021, we have acquired an additional 13 million shares, bringing our total ownership as of November 1, 2021 to 236,702,991 shares representing an ownership interest of 37.72 %.

Subsequent Events.

Our equity in Cash Converters’s net income was $ 4.3 million in fiscal 2021, and our equity in net loss was $ 2.1 million and $ 0.1 million in fiscal 2020 and 2019, respectively.

Cash Converters did not declare or pay a dividend in fiscal 2020 or 2019.

Cash Converters’s accumulated undistributed after-tax earnings included in our consolidated retained earnings were $ 18.0 million as of September 30, 2021.

The following tables present summary financial information for Cash Converters’s most recently reported results as applicable after translation to U.S.

(in thousands) 2021 2020

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Fiscal Year Ended June 30,

2020 2019 2018

(in thousands) 2021 2020 2019

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Gross profit $ 105,851 $ 112,511 $ 111,932

Net (loss) profit ( 7,032 ) ( 1,210 ) 17,443

At September 30, 2020 , the fai r value of our investment in Cash Converters International, as estimated by reference to its quoted market price per share, was greater than its carrying value.

Net profit (loss) $ 12,081 $ ( 7,032 ) $ ( 1,210 )

At September 30, 2021 , the fai r value of our investment in Cash Converters, as estimated by reference to its quoted market price per share, was greater than its carrying value.

For the first and second quarters of fiscal 2019, we determined that our investment was impaired and that such impairment was "other-than-temporary." In reaching this conclusion, we considered all available evidence, including evidence in existence as of September 30, 2018.

Additionally, we noted the following developments subsequent to September 30, 2018:

(i) continued decline in Cash Converters International's share price;

and (ii) ongoing uncertainty around the Queensland, Australia class action lawsuit regarding historical lending practices by Cash Converters International, for which a settlement agreement was reached subsequent to September 30, 2019.

As a result, we recognized "other-than-temporary" impairments in Cash Converters International of $ 13.3 million ($ 10.3 million, net of taxes) and $ 6.5 million ($ 5.0 million, net of taxes) during the first and second quarters of fiscal 2019, respectively.

The fair value of our investment in Cash Converters International was $ 6.2 million below its carrying value as of September 30, 2019, which we determined was not other-than temporary primarily as a result of the subsequent settlement of the remaining Queensland, Australia class action lawsuit and recovery of share price.

We will continue to monitor the fair value of our investment in Cash Converters International for other-than-temporary impairments in future reporting periods and may record additional impairment charges should the fair value of our investment in Cash Converters International decline below its carrying value for an extended period of time.

See Note 6 for the fair value and carrying value of our investment in Cash Converters International.

We hold a 13.14 % ownership in "RDC" and recognized a $ 0.3 million net loss for fiscal year 2020.

(i) continued decline in Cash Converters's share price;

and (ii) ongoing uncertainty around the Queensland, Australia class action lawsuit regarding historical lending practices by Cash Converters, for which a settlement agreement was reached subsequent to September 30, 2019.

As a result, we recognized an other-than-temporary impairment loss in Cash Converters of $ 19.8 million ($ 15.3 million, net of taxes) during fiscal 2019.

The fair value of our investment in Cash Converters was $ 6.2 million below its carrying value as of September 30, 2019, which we determined was not other-than temporary primarily as a result of the subsequent settlement of the remaining Queensland, Australia class action lawsuit and recovery of share price.

We will continue to monitor the fair value of our investment in Cash Converters for other-than-temporary impairments in future reporting periods and may record additional impairment charges should the fair value of our investment in Cash Converters decline below its carrying value for an extended period of time.

Fair Value Measurements for the fair value and carrying value of our investment in Cash Converters.

We hold a 13.14 % ownership in "RDC" and recognized a $ 0.4 million, $ 0.3 million and $ 0.2 million net loss for the fiscal years ended 2021, 2020 and 2019 respe ctively.

FAIR VALUE MEASUREMENTS

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September 30, 2021 September 30, 2021 Fair Value Measurement Using

Level 1 Level 2 Level 3

(in thousands)

(in thousands) Level 1 Level 2 Level 3

Financial assets:

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2025 Convertible Notes 140,643 155,250 — 155,250 —

8.5 % unsecured debt due 2024

872 872 — — 872

Carrying Value Estimated Fair Value

September 30, 2020 September 30, 2020 Fair Value Measurement Using

Level 1 Level 2 Level 3

(in thousands)

(in thousands) Level 1 Level 2 Level 3

Financial assets:

Notes receivable from Grupo Finmart, net $ 7,182 $ 7,582 $ — $ — $ 7,582

2.89 % promissory note receivable due April 2024

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872 872 — — 872

CASHMAX secured borrowing facility 634 634 — — 634

Based primarily on the short-term nature of cash and cash equivalents, pawn loans, pawn service charges receivable and other debt, we estimate that their carrying value approximates fair value.

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Significant increases or decreases in the underlying assumptions used to value pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates.

In September 2020, we received the final payment from AlphaCredit on the notes receivable related to the sale of Grupo Finmart and recorded the amount under “Restricted cash” in our consolidated balance sheet as of September 30, 2020.

Included in “ Accounts payable, accrued expenses and other current liabilities “ in our Consolidated Balance Sheets is $ 4.6 million which represents the fair value of acquisition-related contingent consideration as discussed in Note 3:

Acquisitions.

The key assumptions used to determine the fair value of acquisition-related contingent consideration are estimated by management, not observable in the market and, therefore considered Level 3 inputs within the fair value hierarchy.

In August 2019, AlphaCredit notified us of an indemnity claim for certain pre-closing taxes, but the nature, extent and validity of such claim has yet to be determined.

The inputs used to generate the fair value of the investment in unconsolidated affiliate (Cash Converters International) were considered Level 1 inputs.

These inputs are comprised of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period.

The inputs used to generate the fair value of the investment in Cash Converters were considered Level 1 inputs.

These inputs consist of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period.

We included no control premium for owning a large percentage of outstanding shares.

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In April 2019, we loaned the $ 1.1 million back to the seller of GPMX in exchange for a promissory note.

The note bears interest at the rate of 2.89 % per annum and is secured by certain marketable securities owned

by the seller and held in a U.S.

The note bears interest at the rate of 2.89 % per annum and is secured by certain marketable securities owned by the seller and held in a U.S.

brokerage account.

All principal and accrued interest is due and payable in April 2024.

The note approximated its carrying value as of September 30, 2020.

The principal amount of the note approximated its carrying value as of September 30, 2021 and 2020, respectively.

PROPERTY AND EQUIPMENT

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$ 284,867 $ ( 231,056 ) $ 53,811 $ 267,509 $ ( 210,523 ) $ 56,986

The depreciation of property and equipment is recorded as depreciation expense and included under “Depreciation and amortization” recorded in our Consolidated Statements of Operations.

These amounts were $ 19.4 million, $ 19.6 million and $ 21.0 million for fiscal 2021, 2020 and 2019, respectively.

GOODWILL AND INTANGIBLE ASSETS

We test goodwill and intangible assets with indefinite useful lives for impairment annually, or more frequently when there are events or circumstances that indicate a potential impairment exists.

During the second quarter of fiscal 2020, there was an indicator of impairment due to a decline in our market capitalization.

We performed a quantitative analysis as of March 31, 2020 utilizing the income approach.

This approach uses future cash flows and estimated terminal values for each reporting unit (discounted using a market participant perspective) to determine the fair value of each reporting unit, which is then compared to the carrying value of the reporting unit to determine if an impairment exists.

There is inherent uncertainty associated with these key assumptions, including the duration of the economic downturn associated with COVID-19 and the recovery period.

As a result of our quantitative analysis, we determined the fair value of each of our reporting units was below its carrying value because of the impact of COVID-19, including a significant decline in pawn loan balances due to changes in typical customer behavior and mandated store closures in our GPMX countries.

These factors impacted the forecast of future net revenues and earnings and resulted in lower present value of future cash flows.

We recorded a goodwill impairment charge of $ 41.3 million in the second quarter of fiscal 2020.

These impairments were recorded under "Impairment of goodwill, intangible and other assets" in the Consolidated Statements of Operations.

We further evaluated events and circumstances as of September 30, 2020 and determined there were no indicators of impairment.

As of September 30, 2021, we assessed qualitative factors and determined that it was not more-likely-than-not that the fair values of our reporting units were less than their carrying values as of the testing date.

As a result of our assessment, no goodwill impairment charge was recorded during the fiscal year ended September 30, 2021.

During the second quarter of fiscal 2020, the decline in our market capitalization indicated a possible impairment in the carrying value of goodwill.

We elected to perform a quantitative analysis as of March 31, 2020, using the income approach with discount rates from 11 % to 19 %.

As a result of our quantitative analysis, we determined the fair value of each of our reporting units was below its carrying value, primarily as a result of the impact of the COVID-19 pandemic on typical customer behavior, which led to a significant decline in pawn loan balances, and the mandated closure of stores in our GPMX countries.

We recorded a goodwill impairment charge of $ 41.3 million in the second quarter of fiscal 2020 as “Impairment of goodwill, intangible and other assets” in our Consolidated Statements of Operations.

No further indicators of goodwill impairment were noted as of September 30, 2020.

We test indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test.

Based on our assessment of qualitative factors as of September 30, 2021, no impairment charges were recorded related to intangible assets or long-lived asset groups.

In connection with the analysis of goodwill as of March 31, 2020, we determined that the fair values of the trade names associated with acquired entities in our Mexico and GPMX reporting units were also impaired and recorded an impairment charge of $ 2.9 million and $ 1.7 million, respectively.

Furthermore, we determined the carrying amount of certain long-lived asset groups were not recoverable and recorded an impairment charge of $ 1.1 million in the second quarter of 2020 related to these asset groups.

These impairment charges were recorded as “Impairment of goodwill, intangible and other assets” in our Consolidated Statements of Operations.

No additional indicators of impairment of intangible assets or long-lived asset groups were noted as of September 30, 2020.

The following table presents the changes in the carrying value of goodwill by segment:

(in thousands) U.S.

Pawn Latin America Pawn Consolidated

(in thousands)

Balances as of September 30, 2019 $ 251,752 $ 48,775 $ 300,527

Acquisitions 3,858 ( 1,721 ) 2,137

Effect of foreign currency translation changes — ( 858 ) ( 858 )

Balances as of September 30, 2019 $ 251,752 $ 48,775 $ 300,527

Measurement period adjustments 176 ( 149 ) 27

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Balances as of September 30, 2020 $ 241,928 $ 15,654 $ 257,582

Acquisitions 2,543 26,100 28,643

Effect of foreign currency translation changes — ( 467 ) ( 467 )

Balances as of September 30, 2021 $ 244,471 $ 41,287 $ 285,758

* Represents cumulative goodwill impairment.

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These amounts were $ 11.3 million, $ 11.2 million and $ 7.8 million for fiscal 2021, 2020 and 2019, respectively.

The following table presents our estimate of future amortization expense for definite-lived intangible assets:

Fiscal Year Ended September 30, Amortization expense

(in thousands)

As of September 30, 2021, our estimate of future amortization expense for definite-lived intangible assets is as follows (in thousands):

2022 $ 11,301

As acquisitions and dispositions occur in the future, amortization expense may vary from these estimates.

1 unchanged sentence

September 30, 2021 September 30, 2020

Gross Amount Debt Discount and Issuance Costs Carrying

(in thousands) Gross Amount Debt Discount and Issuance Costs Carrying

Amount Gross Amount Debt Discount and Issuance Costs Carrying

(in thousands)

2024 Convertible Notes $ 143,750 $ ( 20,207 ) $ 123,543 $ 143,750 $ ( 26,557 ) $ 117,193

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— — — 872 — 872

CASHMAX* — — — 634 ( 653 ) ( 19 )

Total $ 316,250 $ ( 52,064 ) $ 264,186 $ 317,122 $ ( 65,893 ) $ 251,229

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Total long-term debt $ 316,250 $ ( 52,064 ) $ 264,186 $ 316,909 $ ( 65,893 ) $ 251,016

* Amounts translated from Guatemalan quetzals and Canadian dollars as of the applicable period end.

* Amounts translated from Guatemalan quetzales as of the applicable period end.

Schedule of Contractual Maturities

Total Less Than

(in thousands) Total Less Than

1 Year 1 - 3 Years 3 - 5 Years

(in thousands)

2024 Convertible Notes* $ 143,750 $ — $ 143,750 $ —

2025 Convertible Notes* 172,500 — — 172,500

8.5 % unsecured debt due 2024

872 213 427 232

Total $ 316,250 $ — $ 143,750 $ 172,500

1 unchanged sentence

Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

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We may not redeem the 2025 Convertible Notes prior to May 1, 2022.

At our option, we may redeem for cash all or any portion of the 2025 Convertible Notes on or after May 1, 2022, if the last reported sale price of the Class A Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption.

conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

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The carrying amount of the 2025 Convertible Notes conversion feature (the “2025 Convertible Notes Embedded Derivative”) is currently included under “Additional paid-in capital” in our Consolidated Balance Sheets of September 30, 2021 and was initially calculated as $ 49.6 million ($ 39.1 million, net of tax).

The 2025 Convertible Notes Embedded Derivative is expected to remain recorded in equity in our consolidated balance sheets as long as it continues to meet the criteria as an equity-classified instrument in subsequent reporting periods.

We incurred transaction costs of $ 5.5 million related to the issuance of the 2025 Convertible Notes, which we recorded as deferred financing costs and are included under “Long-term debt, net” and “Additional paid-in capital” in our Consolidated Balance Sheets.

The effective interest rate for fiscal 2020 was approximately 9 %.

As of September 30, 2020, the remaining unamortized debt discount and issuance costs will be amortized through the 2025 Maturity Date assuming no early conversion.

The effective interest rate for fiscal 2021 was appro ximately 9 %.

As o f September 30, 2021, the remaining unamortized debt discount and issuance costs will be amortized through the 2025 Maturity Date assuming no early conversion.

As of September 30, 2021, the 2025 Convertible Notes were not convertible as no conditions of conversion had been met.

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If one of the conversion conditions is met in any future fiscal quarter, we will classify our net liability under the 2025 Convertible Notes as a current liability in the Consolidated Balance Sheets as of the end of that fiscal quarter.

If none of the conversion conditions have been met in a future fiscal quarter prior to the one-year period immediately preceding the 2025

Maturity Date, we will classify our net liability under the 2025 Convertible Notes as a non-current liability in the consolidated balance sheets as of the end of that fiscal quarter.

If none of the conversion conditions have been met in a future fiscal quarter prior to the one-year period immediately preceding the 2025 Maturity Date, we will classify our net liability under the 2025 Convertible Notes as a non-current liability in the Consolidated Balance Sheets as of the end of that fiscal quarter.

If the note holders elect to convert their 2025 Convertible Notes prior to maturity, any unamortized discount and transaction costs will be recognized as expense at the time of conversion.

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We account for the Class A Common Stock issuable upon conversion under the treasury stock method.

If our share priced increases over $ 10.00 per share, we are required to recognize incremental dilution of our earnings per share.

If our share price increases over $ 10.00 per share, we are required to recognize incremental dilution of our earnings per share.

Prior to January 1, 2024, the 2024 Convertible Notes will be convertible only under the following circumstances:

(1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2017 (and only during such fiscal quarter), if the last reported sale price of our Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price, as defined in the 2017 Indenture, per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our Class A Common Stock and the conversion rate on such trading day;

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Our estimate resulted in an initial carrying value of the liability component of the 2024 Convertible Notes of $ 102.7 million with an associated original issue discount of $ 41.0 million, exclusive of deferred financing costs, accreted to the face value of the 2024 Convertible Notes based on the effective interest method through the 2024 Maturity Date.

financing costs, on the issuance date and included under “Additional paid-in capital” in our consolidated balance sheet, including an allocated portion of the deferred financing costs.

The 2024 Convertible Notes Embedded Derivative is expected to remain recorded in equity in our consolidated balance sheets as long as it continues to meet the criteria as an equity-classified instrument in subsequent reporting periods.

The carrying amount of the 2024 Convertible Notes Embedded Derivative included under “Additional paid-in capital” in our consolidated balance sheet of September 30, 2020 was $ 25.3 million.

We accounted for the conversion feature of the 2024 Convertible Notes as a separate equity-classified instrument (the “2024 Convertible Notes Embedded Derivative”), initially recorded as $ 39.8 million ($ 25.3 million, net of tax), inclusive of deferred financing costs, on the issuance date and included under “Additional paid-in capital” in our Consolidated Balance Sheets, including an allocated portion of the deferred financing costs.The carrying amount of the 2024 Convertible Notes Embedded Derivative included under “Additional paid-in capital” in our Consolidated Balance Sheets of September 30, 2021 was $ 25.3 million.

We incurred transaction costs of $ 4.2 million related to the issuance of the 2024 Convertible Notes, which we recorded as deferred financing costs and are included under “Long-term debt, net” and “Additional paid-in capital” in our Consolidated Balance Sheets .

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CASHMAX Secured Borrowing Facility

In November 2018, we entered into a receivable's securitization facility with a third-party lender (the "lender") to provide funding for installment loan originations in our Canadian CASHMAX business.

Under the facility, a variable interest entity (the "trust") had the right, subject to various conditions, to borrow up to CAD $ 25 million from the lender (the "third-party loan") and use the proceeds to purchase interests in installment loan receivables generated by CASHMAX.

The trust used collections on the transferred receivables to pay various amounts in accordance with an agreed priority arrangement, including expenses, its obligations under the third-party loan and, to the extent available, amounts owned to CASHMAX with respect to the purchase price of the transferred receivables and CASHMAX's retained interest in the

CASHMAX had no obligation with respect to the third-party loan or the transferred receivables except to (a) service the underlying installment loans on behalf of the trust and (b) pay amounts owed under or repurchase the underlying installment loans in the event of a breach by CASHMAX or in certain other limited circumstances.

The facility was nonrecourse to EZCORP (subject to certain limited guaranty obligations), allowed borrowing through November 2019, and was to fully mature in November 2021.

As part of the closure of the operations of our CASHMAX business, we terminated this facility in September 2020.

In November 2018, we entered into a receivable's securitization facility with a third-party lender to provide funding for installment loan originations in our Canadian CASHMAX business.

We terminated this facility in September 2020 as part of the closure of the operations of our CASHMAX business.

COMMON STOCK AND STOCK COMPENSATION

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In December 2019, our Board of Directors (the "Board") authorized the repurchase of up to $ 60.0 million of our Class A Common Stock over three years .

Repurchases under the program were suspended in March 2020 in order to preserve liquidity as a result of uncertainties regarding the COVID-19 pandemic, and no share repurchases under the program were executed for the remainder of fiscal 2020.

Through March 2020, we repurchased and retired 943,149 shares of our Class A Common Stock for $ 5.2 million, which amount was allocated between "Additional paid-in capital" and "Retained earnings" in our Consolidated Balance Sheets.

Stock Compensation

On May 1, 2010 our Board of Directors approved the adoption of the EZCORP, Inc.

2010 Long-Term Incentive Plan (the “LTI Plan”).

The LTI Plan permits grants of options, restricted stock awards and stock appreciation rights covering up to 5,485,649 shares of our Class A Common Stock plus any shares that become available for issuance under either the LTI Plan or prior plans as a result of forfeitures or cancellations of awards without delivery of shares or as a result of withholding shares to satisfy tax withholding obligations.

In December 2017 and November 2018, the Board of Directors and the voting stockholder approved the addition of 1,100,000 and 400,000 shares, respectively, to the LTI Plan.

The purpose of our LTI Plan is to retain the services of valued employees and directors and to incentivize such persons to make contributions to our company and motivate excellent performance.

Our Long-Term Incentive Plan (the “LTI Plan”) permits grants of options, restricted stock awards and stock appreciation rights covering up to 5,485,649 shares of our Class A Common Stock plus any shares that become available for issuance under either the LTI Plan or prior plans as a result of forfeitures or cancellations of awards without delivery of shares or as a result of withholding shares to satisfy tax withholding obligations.

The purpose of the LTI Plan is to retain the services of valued employees and directors and to incentivize such persons to make contributions to our company and motivate excellent performance.

Under the LTI Plan, we grant awards of restricted stock or restricted stock units to employees and non-employee directors.

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Awards are measured at the grant date fair value with compensation costs associated with the awards recognized over the requisite service period, usually the vesting period, on a straight-line basis.

In November 2019 and May 2020, we granted 222,912 and 12,346 , respectively, shares of restricted stock to our non-employee directors with a grant date fair value of $ 4.89 and $ 5.24 , respectively.

These awards vested on September 30, 2020 and were subject only to service conditions.

In December 2017, we granted 1,308,533 restricted stock awards to employees and 84,250 restricted stock awards to non-employee directors with a grant date fair value of primarily $ 9.75 per share.

The awards granted to non-employee directors vested on September 30, 2018 and were subject only to service conditions.

For the awards granted to employees, 190,725 vested on September 30, 2018.

In November 2020, the People and Compensation Committee of the Board of Directors determined that the performance targets for the remaining employee awards were partially achieved, and 446,983 of such awards will vest on December 14, 2020.

In addition, 81,896 awards were canceled, resulting in a reversal of $ 0.80 million of previously recognized stock compensation expense.

In July 2019 and November 2018, we granted 61,138 and 971,615 , respectively, restricted stock awards to employees with a grant date fair value of primarily $ 10.04 and $ 9.18 per share, respectively.

In November 2020, the People and Compensation Committee determined that the performance targets for such awards were not probable of achievement.

This resulted in the cancellation of 458,960 awards and the reversal of $ 2.9 million of previously recognized stock compensation expense.

In April and May 2019, we granted 60,088 restricted stock awards to our seven new non-employee directors with a grant date fair value of primarily $ 10.64 per share.

In November 2018, we granted 59,812 restricted stock awards to our non-employee directors with a grant date fair value of $ 9.18 per share.

The awards granted to non-employee directors vested on September 30, 2019 and were subject only to service conditions.

In November and December 2016 and April 2017, we granted 931,260 restricted stock awards to employees and 72,500 restricted stock awards to non-employee directors, each with a grant date fair value of approximately $ 9.60 per share.

The awards granted to employees vested on September 30, 2019 and 463,467 shares were released.

The awards granted to non-employee directors vested over two years , 50 % on September 30, 2017 and 50 % on September 30, 2018 and were subject only to service conditions.

Board of Director Awards

In February 2021, we granted 127,744 shares of restricted stock to the non-employee directors who were elected to serve one-year terms at the 2021 Annual Meeting of Stockholders.

Those shares are scheduled to vest at the 2022 Annual Meeting of Stockholders (but in no event later than March 31, 2022), subject only to service conditions.

In December 2020, we granted 143,145 shares of restricted stock to the non-employee directors serving at that time.

Those shares were scheduled to vest on March 31, 2021, subject only to service conditions.

The vesting of 79,525 of such shares was accelerated to February 18, 2021 (the date of the 2021 Annual Meeting of Stockholders) when the term of service for five of the non-employee directors ended.

The remaining 63,620 shares vested on March 31, 2021.

In May 2020, we granted 12,346 shares of restricted stock to a newly-elected non-employee director, and in November 2019, we granted 222,912 shares of restricted stock to the non-employee directors serving at that time.

The vesting of these shares was subject only to service conditions, and all of such shares vested on September 30, 2020.

In May 2019 and April 2019, we granted a total of 60,088 shares of restricted stock to our seven newly-elected non-employee directors, and in November 2018, we granted 59,812 shares of restricted stock to our non-employee directors serving at that time.

The vesting of these shares was subject only to service conditions, and all of the shares vested on September 30, 2019.

Employee Awards

All LTI Plan awards are reviewed and approved by the People and Compensation Committee of the Board of Directors (the “Committee”).

FY21 Awards — In February 2021, we granted 1,177,214 shares of restricted stock to employees.

The awards have a three-year performance period consisting of fiscal 2021, fiscal 2022 and fiscal 2023.

For each award, the total number of shares was allocated equally among the three fiscal years in the performance period, with each tranche having separate performance conditions.

The number of shares available to vest from each tranche can range from 0 to 150 % and is dependent on the achievement of the performance condition for that tranche.

All of the shares that become available to vest based on the achievement of the performance conditions will vest on September 30, 2023, subject to continuous, active employment with the Company through that date.

Performance targets for the fiscal 2021 tranche were determined and communicated in February 2021.

Grant dates for the other two tranches will be determined when the applicable performance targets are established for these tranches.

As of September 30, 2021, we considered the performance targets for the fiscal 2021 tranche to be probable of achievement at the 150 % level.

In August 2021, we granted an additional 4,722 shares of restricted stock to employees under similar terms as those granted in February 2021.

FY20 Awards — In January 2020, the Committee approved restricted stock awards for employees but did not finalize the performance targets at that time.

In November 2020, the Committee approved the applicable performance targets and we granted 550,224 shares of restricted stock to employees.

We consider the awards to have a three-year performance period consisting of fiscal 2020, fiscal 2021 and fiscal 2022, with a service condition applicable to fiscal 2020 and then separate performance conditions applicable to fiscal 2021 and 2022.

For each award, the total number of shares was allocated equally among fiscal 2021 and fiscal 2022, with each tranche having separate performance conditions.

The number of shares available to vest from each tranche is dependent on the achievement of the performance condition for that tranche and can range from 0 to 100 %.

All of the shares that become available to vest based on the achievement of the performance conditions will vest on September 30, 2022, subject to continuous, active employment with the Company through that date.

Performance targets for the fiscal 2021 tranche were communicated in January 2021.

Grant dates for the fiscal 2022 tranche will be determined when performance targets are established for that tranche.

As of September 30, 2021, we considered the performance targets for the fiscal 2021 tranche to be probable of achievement at the 100 % level.

FY19 Awards — In July 2019 and November 2018, we granted 61,138 shares of restricted stock and 971,615 shares of restricted stock, respectively, to employees.

The awards had a three-year performance period consisting of fiscal 2019, fiscal 2020 and fiscal 2021, and were subject to a single three-year performance condition as well as a service condition through the end of the performance period.

In November 2020, the Committee determined that the stated performance target for such awards was not probable of achievement and approved a modification of such awards that reduced the number of shares available for vesting and established a new one-year performance condition (in addition to the continuing service condition) applicable to the vesting of the remaining shares.

We treated this modification as a cancellation of the existing awards and the grant of new awards subject to a new performance condition, which resulted in (1) the cancellation of awards covering 458,960 shares and the reversal of $ 2.9 million of previously recognized stock compensation expense and (2) the grant of 358,883 shares of restricted stock.

These awards are scheduled to vest on September 30, 2021, subject to the achievement of the specified performance target, which will be determined in November 2021.

As of September 30, 2021, we considered that performance target to be probable of achievement.

FY18 Awards — In December 2017, we granted 1,308,533 shares of restricted stock to employees.

The awards had a three-year performance period consisting of fiscal 2018, fiscal 2019 and fiscal 2020, and were subject to a single three-year performance condition as well as a service condition through the end of the performance period.

Awards covering 190,725 shares vested on September 30, 2018.

In November 2020, the Committee determined that the performance target applicable to the awards was only partially achieved,and approved the vesting of 295,723 shares in December 2020.

Awards covering 81,896 shares were cancelled, resulting in a reversal of $ 0.8 million of previously recognized stock compensation expense.

FY17 Awards — In November and December 2016 and April 2017, we granted 931,260 shares of restricted stock to employees.

The awards had a three-year performance period consisting of fiscal 2017, fiscal 2018 and fiscal 2019, and were subject to a single three-year performance condition as well as a service condition through the end of the performance period.

Following the end of fiscal 2019, the Committee determined that the applicable performance target had been achieved, and the awards that remained outstanding at that time (covering 463,467 shares) vested.

As of September 30, 2021, the unamortized fair value, exclusive of forfeitures, of share awards to be amortized over their remaining vesting periods was approximately $ 1.2 million.

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Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

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Granted 1,811,708 4.92

Vested and released (a) ( 989,223 ) 8.67

Forfeited ( 2,825,459 ) 8.59

( 675,475 ) 7.59

Cancelled ( 26,376 ) 6.20

Outstanding as of September 30, 2021 2,218,777 $ 4.86

(a) 268,798 shares were withheld to satisfy related federal income tax withholding.

(a) 168,653 shares were withheld to satisfy related income tax withholding.

The following table presents a summary of the fair value of shares granted:

Fiscal Year Ended September 30,

2020 2019 2018

(in millions except per share amounts) 2021 2020 2019

Weighted average grant date fair value per share granted (a)

Total grant date fair value of shares vested $ 5.1 $ 11.8 $ 2.3

$ 4.92 $ 5.73 $ 9.29

Total market value of shares released $ 3.4 $ 5.1 $ 11.8

(a) Awards with performance and time-based vesting provisions are generally valued based upon the underlying share price as of the issuance date.

We have not declared or paid any dividends and currently do not anticipate paying any dividends in the immediate future.

As described in Note 9, payment of a dividend requires an adjustment to the conversion rate of our Convertible Notes .

As described in Note 9:

Debt, payment of a dividend requires an adjustment to the conversion rate of our Convertible Notes .

Should we pay dividends in the future, our certificate of incorporation provides that cash dividends on common stock, when declared, must be declared and paid at the same per share amounts on both classes of stock.

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Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

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* Includes the majority of our corporate administrative costs.

See Note 14 for information pertaining to segment contribution.

Segment Information for information pertaining to segment contribution.

The following table presents the significant components of the income tax provision:

Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

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Total income tax (benefit) expense $ 7,450 $ ( 1,632 ) $ 2,406

* The year ended September 30, 2018 includes a $ 2.1 million charge resulting from the remeasurement of our domestic net deferred tax assets based on the new corporate income tax rate as a result of the Tax Cuts and Jobs Act(“the Act”), as well as $ 2.6 million charge resulting from recording a valuation allowance against foreign tax credit carryforwards that do not meet the “more likely than not” threshold to be utilized as a result of tax law changes included in the Act.

The following table presents a reconciliation of income taxes calculated at the statutory rate and the provision for income taxes:

Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

Income tax (benefit) expense at the federal statutory rate $ ( 14,720 ) $ 878 $ 13,623

Income tax expense (benefit) at the federal statutory rate $ 3,374 $ ( 14,720 ) $ 878

State taxes, net of federal benefit 931 951 184

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Uncertain tax positions 208 2,849 ( 1,596 )

Change in tax rate resulting from enactment of the Act — — 2,558

Non-deductible impairment — 9,093 —

Deferred tax true-up 896 — —

Other ( 96 ) 654 234

Total income tax (benefit) expense $ ( 1,632 ) $ 2,406 $ 18,389

Total income tax expense (benefit) $ 7,450 $ ( 1,632 ) $ 2,406

Effective tax rate 46 % 2 % 58 %

3 unchanged sentences

Deferred tax assets:

Cash Converters International $ 15,049 $ 14,616

Cash Converters $ 13,848 $ 15,049

Tax over book inventory 7,595 9,737

8 unchanged sentences

Valuation allowance ( 19,135 ) ( 18,524 )

Net deferred tax assets 44,457 35,617

Total deferred tax assets, net 44,587 44,457

Deferred tax liabilities:

4 unchanged sentences

Net deferred tax asset $ 6,062 $ 8,407

As of September 30, 2020, we had state net operating loss carryforwards of approximately $ 123.0 million, which begin to expire in 2021 if not utilized.

We also had foreign net operating loss carryforwards of $ 42.0 million, which will expire between 2030 and 2038 if not utilized.

As of September 30, 2021, we had federal and state net operating loss carryforwards of approximately $ 100.6 million, which begin to expire in 2022 if not utilized.

We also had foreign net operating loss carryforwards of $ 56.9 million, which will begin to expire in 2030 if not utilized.

Additionally, we have a $ 1.7 million foreign tax credit that will expire between 2024 to 2027 if not utilized.

2 unchanged sentences

A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized.

Our valuation allowance has been established to offset certain state and foreign net operating loss carryforwards, capital loss carryforwards and foreign tax credit carryforwards that are not more likely than not to be utilized prior to expiration.

The valuation allowance increased by $ 0.4 million in fiscal 2020, primarily due to the recording of a valuation allowance for losses generated during the year in certain foreign jurisdictions which we believe are not more likely than not to be utilized partially offset by a decrease for certain foreign tax credits for which we amended a tax return to take a deduction instead of a foreign tax credit thereby reversing the deferred tax asset and corresponding valuation allowance.

Our valuation allowance has been established to offset certain state and foreign net operating loss carryforwards and foreign tax credit carryforwards that are not more likely than not to be utilized prior to expiration.

The valuation allowance increased by $ 0.6 million in fiscal 2021, primarily due to the recording of a valuation allowance for losses generated during the year in certain foreign jurisdictions which we believe are not more likely than not to be utilized.

We believe our results from future operations will generate sufficient taxable income in the appropriate jurisdictions such that it is more likely than not that the remaining deferred tax assets will be realized.

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We estimate that, upon distribution of our share of these earnings, we would be subject to withholding taxes of approximately $ 3.8 million as of September 30, 2021.

We provided deferred income taxes on all undistributed earnings from Cash Converters International.

The following table presents a rollforward of unrecognized tax benefits:

We provided deferred income taxes on all undistributed earnings from Cash Converters.

The following table presents a roll-forward of unrecognized tax benefits:

Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

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All of the above unrecognized tax benefits, if recognized, would impact our effective tax rate for the respective period of each ending balance.

The statute of limitations will expire within the next twelve months with respect to approximately $ 2.2 million of foreign uncertain tax positions.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

During 2021, 2020, and 2019, the Company recognized income tax expense consisting of interest and penalties of $ 0.3 million, $ 1.2 million, and $ 0.2 million, respectively, due to the accrual of current year interest and penalties on existing positions offset by the reversal of previous accruals due to the lapse of the statute of limitations.

The total amount of accrued interest and penalties was $ 1.5 million and $ 0.3 million in 2020 and 2019, respectively.

The total amount of accrued interest and penalties was $ 1.8 million, $ 1.5 million and $ 0.3 million in 2021, 2020 and 2019, respectively.

We are subject to U.S., Mexico, Canada, Guatemala, Honduras, El Salvador, Peru and the Netherlands income taxes as well as income taxes levied by various state and local jurisdictions.

7 unchanged sentences

Straight-line rent accrual ( 8,479 )

Net lease right-of-use asset $ 237,549

Net right-of-use asset $ 237,549

Lease liability, current $ 45,272

1 unchanged sentence

Total lease liability $ 246,028

In connection with the preparation of our consolidated financial statements for the year ended September 30, 2020, we identified an error relating to certain leases on the adoption of ASC 842 at October 1, 2019.

The error impacted the lease right-of-use asset and total lease liability, both of which were overstated by approximately $ 18.0 million on adoption.

We concluded the impact on the interim financial statements during fiscal 2020 was immaterial and corrected the balances as of September 30, 2020.

The income statement impact of this correction was immaterial.

The components of lease expense included in "Operations" and "Administrative" expense, based on the underlying lease use, in our consolidated statements of operations is as follows (in thousands):

The table below presents balances of our operating leases:

(in thousands) September 30, 2021 September 30, 2020

Right-of-use asset $ 200,990 $ 183,809

Lease liability, current $ 52,263 $ 49,742

Lease liability, non-current 161,330 153,040

Total lease liability $ 213,593 $ 202,782

The table below provides the composition of our lease costs:

Fiscal Year Ended September 30,

(in thousands) 2021 2020

Operating lease expense $ 61,980 $ 62,925

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As of September 30, 2021, maturities of lease liabilities under ASC 842 by fiscal year were as follows (in thousands):

2021 $ 66,079

Thereafter 39,390

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The lease includes two five-year extension options at the end of the initial lease term.

The estimated minimum future rental payments under the lease are approximately $ 38.1 million.

The estimated minimum future rental payments under the lease are approximately $ 27.9 million as of September 30, 2021.

During fiscal 2017 and 2016, we initiated subleases for a portion of our corporate operating office lease for estimated minimum future sublease payments of approximately $ 12.2 million.

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Sublease payments are expected to offset substantially all of our original operating lease obligations over the nine-year period beginning March 2015 and ending September 2024.

Prior to the adoption of ASC 842, future minimum undiscounted lease payments due under non-cancelable leases as of September 30, 2019 for each subsequent year were as follows (in thousands):

2020 $ 69,291

Thereafter 39,256

The following table presents the amount of net rent recognized as expense under ASC Topic 840 — Leases (in thousands):

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We determined the undiscounted cash flows of the subleases did not exceed the net book value of the right of use asset.

We then determined the discounted cash flows of the subleases did not exceed the book value of the right of use asset, and an impairment charge of $ 5.0 million was recorded in the fourth quarter of fiscal 2020 and is recorded under "Impairment of goodwill, intangible and other assets" in the Consolidated Statements of Operations.

We recorded $ 29.2 million in non-cash additions to our right of use assets and lease liabilities for the fiscal year ended September 30, 2020.

We then determined the discounted cash flows of the subleases did not exceed the book value of the right of use asset, and an impairment

charge of $ 5.0 million was recorded in the fourth quarter of fiscal 2020 and is recorded under “Impairment of goodwill, intangible and other assets” in the Consolidated Statements of Operations.

No such charge was taken in fiscal year 2021.

We recorded $ 62.8 million and $ 29.2 million in non-cash additions to our right of use assets and lease liabilities for the fiscal year ended September 30, 2021 and 2020, respectively.

CONTINGENCIES

Currently, and from time to time, we are involved in various claims, suits, investigations and legal proceedings.

Currently, and from time to time, we are involved in various claims, disputes, lawsuits, investigations and legal and regulatory proceedings.

We accrue for contingencies if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Because these matters are inherently unpredictable and unfavorable developments or resolutions can occur, assessing contingencies requires judgments and is highly subjective about future events.

The amount of resulting loss may differ from these estimates.

While we are unable to determine the ultimate outcome of any current litigation or regulatory actions, we do not believe the resolution of any particular matter will have a material adverse effect on our financial condition, results of operations or liquidity.

SEGMENT INFORMATION

During the first quarter of fiscal 2020, we revised the financial information our chief operating decision maker (our chief executive officer) reviews for operational decision-making purposes and for allocation of capital to include the separate financial results of our Lana business.

Our operations are primarily managed on a geographical basis and consist of three reportable segments.

The factors for determining our reportable segments include the manner in which our chief operating decision maker (CODM) evaluates performance for purposes of allocating resources and assessing performance.

During the first quarter of fiscal 2021, the financial information of our Lana business activities were no longer reviewed by the CODM for evaluating performance since Lana no longer has business activities but, rather, offers support activities to our U.S.

Pawn and Latin America Pawn operating segments.

As a result, Lana is no longer an operating or reportable segment.

Our historical segment results have been recast to conform to current presentation.

We currently report segment information as follows:

We currently report our segments as follows:

Pawn — All pawn activities in the United States;

• Latin America Pawn — All pawn activities in Mexico and other parts of Latin America;

• Lana — Our digital customer-centric engagement platform;

• Other International — Primarily our equity interest in the net income of Cash Converters International.

• Other International — Primarily our equity interest in the net income of Cash Converters and RDC.

There are no inter-segment revenues presented below, and the amounts below were determined in accordance with the same accounting principles used in our condensed consolidated financial statements.

While we expect the operations of the Lana segment to have a positive impact on pawn loan redemption rates and therefore pawn service charges and yield, the pawn service charges will all be reported in our pawn segments rather than allocated to the Lana segment.

Only discrete revenues related to the Lana segment will be reported in the Lana segment results.

As a digital offering, Lana has no separate physical store locations.

The following tables present revenue for each reportable segment, disaggregated revenue within our three reportable segments and Corporate, segment profits and segment contribution.

Fiscal Year Ended September 30, 2021

Pawn Latin America Pawn Lana Other

(in thousands) U.S.

Pawn Latin America Pawn Other

International Total Segments Corporate Items Consolidated

(in thousands)

Merchandise sales $ 341,495 $ 101,303 $ — $ 442,798 $ — $ 442,798

5 unchanged sentences

Jewelry scrapping cost of goods sold 13,001 9,847 — 22,848 — 22,848

Other cost of revenues — 101 — 953 1,054 — 1,054

Net revenues 349,541 99,524 420 449,485 — 449,485

Segment and corporate expenses (income):

Operations 261,608 69,916 4,270 5,246 341,040 — 341,040

Administrative — — — — — 49,897 49,897

Impairment of goodwill, intangible and other assets 10,000 35,938 — 1,149 47,087 7,579 54,666

Store expenses 253,344 77,493 — 330,837 — 330,837

General and administrative — — — — 56,495 56,495

Depreciation and amortization 10,650 7,371 — 18,021 12,651 30,672

Loss (gain) on sale or disposal of assets and other 385 ( 72 ) — ( 20 ) 293 508 801

Gain (loss) on sale or disposal of assets and other 27 ( 6 ) — 21 62 83

Other Charges — 229 — 229 — 229

1 unchanged sentence

Interest income — ( 2,016 ) — ( 2,016 ) ( 461 ) ( 2,477 )

Equity in net loss of unconsolidated affiliates — — — 2,429 2,429 — 2,429

Equity in net income of unconsolidated affiliates — — ( 3,803 ) ( 3,803 ) — ( 3,803 )

Other (income) expense — ( 840 ) ( 173 ) ( 1,013 ) 223 ( 790 )

Segment contribution (loss) $ 73,106 $ ( 26,659 ) $ ( 8,552 ) $ ( 10,359 ) $ 27,536

Segment contribution $ 85,520 $ 17,293 $ 4,396 $ 107,209

Income (loss) from continuing operations before income taxes $ 107,209 $ ( 91,147 ) $ 16,062

Fiscal Year Ended September 30, 2020

Pawn Latin America Pawn Lana Other

(in thousands) U.S.

Pawn Latin America Pawn Other

International Total Segments Corporate Items Consolidated

(in thousands)

Merchandise sales $ 391,921 $ 106,292 $ — $ 498,213 $ — $ 498,213

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Operating expenses (income):

Operations 269,003 74,199 7,675 7,376 358,253 — 358,253

Administrative — — — — — 55,990 55,990

Store expenses 261,608 69,916 5,246 336,770 — 336,770

General and administrative — — — — 54,133 54,133

Impairment of goodwill, intangible and other assets 10,000 35,938 1,149 47,087 7,579 54,666

Depreciation and amortization 11,030 7,315 68 18,413 12,414 30,827

Loss on sale or disposal of assets 3,402 691 — 282 4,375 24 4,399

Gain (loss) on sale or disposal of assets 385 ( 72 ) ( 20 ) 293 508 801

Other Charges 3,106 1,715 3,802 8,623 11,765 20,388

Interest expense — 685 549 1,234 21,238 22,472

Interest income — ( 1,586 ) — ( 1,586 ) ( 1,587 ) ( 3,173 )

Equity in net income of unconsolidated affiliates — — — 135 135 — 135

Impairment of investment in unconsolidated affiliates — — — 19,725 19,725 — 19,725

Other income — ( 93 ) — 1,895 1,802 ( 378 ) 1,424

Equity in net loss of unconsolidated affiliates — — 2,429 2,429 — 2,429

Other (income) expense — ( 156 ) 6 ( 150 ) 133 ( 17 )

Segment contribution (loss) $ 73,106 $ ( 26,659 ) $ ( 10,359 ) $ 36,088

Income from continuing operations before income taxes $ 91,284 $ ( 87,110 ) $ 4,174

Income (loss) from continuing operations before income taxes $ 36,088 $ ( 106,183 ) $ ( 70,095 )

Fiscal Year Ended September 30, 2019

Pawn Latin America Pawn Lana Other

(in thousands) U.S.

Pawn Latin America Pawn Other

International Total Segments Corporate Items Consolidated

(in thousands)

Merchandise sales $ 355,996 $ 97,379 $ — $ 453,375 $ — $ 453,375

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Operating expenses (income):

Operations 263,094 61,553 — 10,194 334,841 — 334,841

Administrative — — — — — 53,639 53,639

Impairment of goodwill and intangibles assets — — — — — — —

Store expenses 269,003 74,199 7,376 350,578 — 350,578

General and administrative — — — — 63,665 63,665

Depreciation and amortization 11,879 6,267 219 18,365 10,432 28,797

2 unchanged sentences

Interest income — ( 1,601 ) — ( 1,601 ) ( 9,485 ) ( 11,086 )

Equity in net income of unconsolidated affiliates — — — ( 5,529 ) ( 5,529 ) — ( 5,529 )

Equity in net loss of unconsolidated affiliates — — 135 135 — 135

Impairment of investment in unconsolidated affiliates — — 19,725 19,725 — 19,725

Other income ( 3 ) ( 42 ) — ( 132 ) ( 177 ) ( 5,214 ) ( 5,391 )

Segment contribution $ 102,721 $ 33,161 $ — $ ( 10,006 ) $ 125,876

Income from continuing operations before income taxes $ 125,876 $ ( 70,337 ) $ 55,539

Other (income) expense — ( 93 ) 1,895 1,802 ( 378 ) 1,424

Segment contribution (loss) $ 101,675 $ 24,124 $ ( 26,830 ) $ 98,969

Income (loss) from continuing operations before income taxes $ 98,969 $ ( 94,795 ) $ 4,174

The following table presents separately identified segment assets:

Pawn Latin America Pawn Lana Other

(in thousands) U.S.

Pawn Latin America Pawn Other

International Corporate Total

(in thousands)

Assets as of September 30, 2021

8 unchanged sentences

Total assets 690,157 191,827 34,118 280,921 1,197,023

The net assets of our Latin America Pawn segment, exclusive of intercompany amounts and inclusive of certain other assets not separately identified above, w ere $ 194.8 million as o f September 30, 2020.

The net assets of our Latin America Pawn segment, exclusive of intercompany amounts and inclusive of certain other assets not separately identified above, were $ 199.2 million as of September 30, 2021.

The following tables provide geographic information:

Fiscal Year Ended September 30,

2020 2019 2018

(in thousands) 2021 2020 2019

10 unchanged sentences

Other Latin America 3,905 $ 5,484

Canada and other — 85

Total long-lived assets $ 56,986 $ 67,357

Total long-lived tangible assets $ 53,811 $ 56,986

SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

Supplemental Consolidated Financial Information

The following table provides information on net amounts included in our consolidated balance sheets and consolidated statements of cash flows:

The following table provides information on net amounts included in our Consolidated Balance Sheets:

September 30,

12 unchanged sentences

Accrued payroll 9,093 12,993

Bonus accrual 4,895 9,901

Incentive accrual 16,868 4,895

Other payroll related expenses 10,695 9,071

Accrued interest 2,793 2,793

Accrued rent and property taxes 6,545 11,702

Accrued sales and VAT taxes 10,936 9,291

Deferred revenues 2,986 2,929

Other accrued expenses 3,173 2,510

Income taxes payable 643 307

Other current liabilities 20,214 16,140

Account payable, accrued expenses and other current liabilities $ 90,268 $ 71,504

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The following table provides information on our valuation and qualifying accounts not disclosed elsewhere:

Description Balance at Beginning of Period Charged to Expense Charged to Revenue Deductions Balance at End of Period

(in thousands)

(in thousands) Balance at Beginning of Period Charged to Expense Charged to Revenue Deductions Balance at End of Period

Allowance for valuation of inventory:

14 unchanged sentences

Year Ended September 30, 2019 20,254 — — 2,160 18,094

SUBSEQUENT EVENTS

On October 1, 2021, we purchased an additional 13 million shares of Cash Converters for $ 2.5 million.

This purchase increased our total ownership in Cash Converters to 236,702,991 shares, representing a 37.72 % ownership interest.

Additionally, in October 2021, we received a cash dividend of $ 1.7 million from Cash Converters.

On October 6, 2021, the Company invested $ 15.0 million in exchange for a non-redeemable voting participating preferred equity interest in Founders One, LLC (“Founders”), a newly-formed entity with one other member.

Founders used that $ 15.0 million to acquire an equity interest in Simple Management Group, Inc.

(“SMG”) which owns and operates more than 20 pawn stores principally in the Caribbean region, with plans to build and acquire more stores in that region.

This investment in Founders is accounted for utilizing the measurement alternative within ASC 321, Investments — Equity Securities.

QUARTERLY INFORMATION (UNAUDITED)

First Quarter Second Quarter Third Quarter Fourth Quarter

(in thousands, except per share amounts)

(in thousands, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter

Year Ended September 30, 2021

4 unchanged sentences

Diluted earnings (loss) per share $ 0.08 $ 0.10 $ ( 0.05 ) $ 0.03

First Quarter Second Quarter Third Quarter Fourth Quarter

(in thousands, except per share amounts)

(in thousands, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter

Year Ended September 30, 2020

1 unchanged sentence

Net revenues $ 130,069 $ 127,362 $ 102,175 $ 89,596

(Loss) income from continuing operations, net of tax ( 3,660 ) 2,659 3,361 ( 592 )

(Loss) income from discontinued operations, net of tax ( 183 ) ( 18 ) ( 203 ) ( 53 )

Net (loss) income ( 3,843 ) 2,641 3,158 ( 645 )

Net (loss) income attributable to noncontrolling interest ( 477 ) ( 753 ) — —

Net (loss) income attributable to EZCORP, Inc.

$ ( 3,366 ) $ 3,394 $ 3,158 $ ( 645 )

Basic earnings per share attributable to EZCORP, Inc.:

$ ( 0.06 ) $ 0.06 $ 0.06 $ ( 0.01 )

Diluted earnings per share attributable to EZCORP, Inc.:

$ ( 0.06 ) $ 0.06 $ 0.06 $ ( 0.01 )

ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Net income (loss) $ 1,238 $ ( 40,874 ) $ ( 5,487 ) $ ( 23,340 )

Basic earnings (loss) per share $ 0.02 $ ( 0.74 ) $ ( 0.10 ) $ ( 0.42 )

Diluted earnings (loss) per share $ 0.02 $ ( 0.74 ) $ ( 0.10 ) $ ( 0.42 )

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data