What changed in this filing

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Item 1. Financial Statements

2022-02-02 compared with 2021-08-04 · 230 added, 304 removed, 396 unchanged (57% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts) June 30,

(in thousands, except share and per share amounts) December 31,

September 30,

5 unchanged sentences

Inventory, net 119,313 94,980 110,989

Notes receivable, net — 3,866 —

Prepaid expenses and other current assets 31,209 32,824 31,010

1 unchanged sentence

Investments in unconsolidated affiliates 42,513 31,773 37,724

Other investments 16,500 — —

Property and equipment, net 52,201 55,204 53,811

Lease right-of-use asset 185,467 204,591 183,809

Right-of-use asset, net 201,527 177,308 200,990

Goodwill 284,619 258,453 285,758

21 unchanged sentences

issued and outstanding:

53,086,438 as of June 30, 2021;

52,097,590 as of June 30, 2020;

53,344,218 as of December 31, 2021;

52,628,588 as of December 31, 2020;

and 53,086,438 as of September 30, 2021

10 unchanged sentences

Three Months Ended

Nine Months Ended

(in thousands, except per share amount) 2021 2020

6 unchanged sentences

Jewelry scrapping cost of goods sold 5,772 5,202

Other cost of revenues — 32 — 1,093

Net revenues 132,111 108,390

2 unchanged sentences

General and administrative 15,545 12,510

Impairment of goodwill, intangible and other assets — — — 47,060

Depreciation and amortization 7,574 7,572

Loss on sale or disposal of assets and other — 255 90 1,260

Other charges 497 — 497 —

Loss (gain) on sale or disposal of assets and other 5 ( 22 )

Total operating expenses 109,895 99,369

Operating income (loss) 3,713 ( 4,276 ) 23,361 ( 21,508 )

Operating income 22,216 9,021

Interest expense 2,431 5,455

Interest income ( 304 ) ( 821 )

Equity in net (income) loss of unconsolidated affiliates ( 643 ) 1,183 ( 2,409 ) 5,896

Other expense (income) 65 28 ( 389 ) ( 215 )

(Loss) income before income taxes ( 766 ) ( 10,238 ) 11,535 ( 41,366 )

Income tax expense (benefit) 1,804 ( 4,751 ) 4,476 3,757

Net (loss) income $ ( 2,570 ) $ ( 5,487 ) $ 7,059 $ ( 45,123 )

Basic (loss) earnings per share $ ( 0.05 ) $ ( 0.10 ) $ 0.13 $ ( 0.81 )

Diluted (loss) earnings per share $ ( 0.05 ) $ ( 0.10 ) $ 0.13 $ ( 0.81 )

Equity in net income of unconsolidated affiliates ( 1,138 ) ( 516 )

Other income ( 120 ) ( 599 )

Income before income taxes 21,347 5,502

Income tax expense 5,626 1,203

Net income $ 15,721 $ 4,299

Basic earnings per share $ 0.28 $ 0.08

Diluted earnings per share $ 0.21 $ 0.08

Weighted-average basic shares outstanding 56,183 55,361

1 unchanged sentence

See accompanying notes to unaudited interim condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Nine Months Ended

(in thousands) 2021 2020

Net (loss) income $ ( 2,570 ) $ ( 5,487 ) $ 7,059 $ ( 45,123 )

Other comprehensive income (loss):

Net income $ 15,721 $ 4,299

Other comprehensive income:

Foreign currency translation adjustment, net of tax 3,039 11,277

Comprehensive income (loss) $ 889 $ ( 71 ) $ 20,035 $ ( 63,482 )

Comprehensive income $ 18,760 $ 15,576

See accompanying notes to unaudited interim condensed consolidated financial statements.

4 unchanged sentences

Earnings Accumulated

Comprehensive (Loss) Income Total Equity

Comprehensive Loss Total Equity

(in thousands) Shares Par Value

3 unchanged sentences

Taxes paid related to net share settlement of equity awards — — ( 792 ) — — ( 792 )

Cumulative effect of adoption of ASU 2020-06 (Note 1) — — ( 64,263 ) 26,857 — ( 37,406 )

Foreign currency translation gain — — — — 3,039 3,039

1 unchanged sentence

Balances as of December 31, 2021 56,314 $ 563 $ 339,955 $ 369,359 $ ( 55,376 ) $ 654,501

Stock compensation — — 1,094 — — 1,094

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

Release of restricted stock 212 2 — — — 2

Taxes paid related to net share settlement of equity awards — — ( 109 ) — — ( 109 )

Foreign currency translation loss — — — — ( 1,760 ) ( 1,760 )

Net Income — — — 5,330 — 5,330

Balances as of March 31, 2021 55,844 $ 558 $ 399,439 $ 327,798 $ ( 58,551 ) $ 669,244

Stock compensation — — 1,538 — — 1,538

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

Foreign currency translation gain — — — — 3,459 3,459

Net loss — — — ( 2,570 ) — ( 2,570 )

Balances as of June 30, 2021 56,057 $ 560 $ 402,522 $ 325,228 $ ( 55,092 ) $ 673,218

Common Stock Additional

1 unchanged sentence

Earnings Accumulated

Comprehensive (Loss) Income Total Equity

Comprehensive Loss Total Equity

(in thousands) Shares Par Value

4 unchanged sentences

Foreign currency translation gain — — — — 11,277 11,277

Purchase and retirement of treasury stock ( 142 ) ( 2 ) ( 488 ) ( 473 ) — ( 963 )

Net income — — — 4,299 — 4,299

Balances as of December 31, 2020 55,599 $ 556 $ 398,269 $ 322,468 $ ( 56,791 ) $ 664,502

Stock compensation — — 930 — — 930

Release of restricted stock 13 1 — — — 1

Taxes paid related to net share settlement of equity awards — — ( 63 ) — — ( 63 )

Foreign currency translation loss — — — — ( 29,846 ) ( 29,846 )

Purchase and retirement of treasury stock ( 801 ) ( 9 ) ( 2,136 ) ( 2,050 ) — ( 4,195 )

Net loss — — — ( 40,874 ) — ( 40,874 )

Balances as of March 31, 2020 55,068 $ 551 $ 406,171 $ 347,004 $ ( 76,173 ) $ 677,553

Stock compensation — — 2,430 — — 2,430

Foreign currency translation gain — — — — 5,416 5,416

Net loss — — — ( 5,487 ) — ( 5,487 )

Balances as of June 30, 2020 55,068 $ 551 $ 408,601 $ 341,517 $ ( 70,757 ) $ 679,912

See accompanying notes to unaudited interim condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Three Months Ended

(in thousands) 2021 2020

Operating activities:

Net income (loss) $ 7,059 $ ( 45,123 )

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Net income $ 15,721 $ 4,299

Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization 7,574 7,572

1 unchanged sentence

Amortization of lease right-of-use asset 12,694 11,504

Accretion of notes receivable discount and deferred compensation fee — ( 688 )

Deferred income taxes 587 ( 1,421 )

Impairment of goodwill and intangible assets — 47,060

Other adjustments ( 30 ) ( 167 )

1 unchanged sentence

Stock compensation expense 1,698 524

Equity in net (income) loss of unconsolidated affiliates ( 2,409 ) 5,896

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

Equity in net income of unconsolidated affiliates ( 1,138 ) ( 516 )

Changes in operating assets and liabilities:

Service charges and fees receivable ( 419 ) ( 4,034 )

4 unchanged sentences

Income taxes 4,741 68

Net cash provided by operating activities 33,122 56,365

Dividends from unconsolidated affiliates 1,660 —

Net cash provided by (used in) operating activities 9,018 ( 4,513 )

Investing activities:

3 unchanged sentences

Capital expenditures, net ( 4,985 ) ( 3,223 )

Acquisitions, net of cash acquired ( 15,132 ) —

Principal collections on notes receivable — 4,000

Net cash (used in) provided by investing activities ( 37,086 ) 110,389

Issuance of note receivable ( 1,000 ) —

Investment in unconsolidated affiliates ( 2,477 ) —

Investment in other investments ( 16,500 ) —

Net cash used in investing activities ( 30,603 ) ( 15,062 )

Financing activities:

Taxes paid related to net share settlement of equity awards ( 792 ) ( 730 )

Payout of deferred consideration — ( 350 )

Proceeds from borrowings, net of issuance costs — ( 106 )

Payments on assumed debt and other borrowings — ( 53 )

Repurchase of common stock — ( 5,158 )

Net cash used in financing activities ( 792 ) ( 783 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash 719 6,266

Net (decrease) increase in cash, cash equivalents and restricted cash ( 15,090 ) 152,688

Net decrease in cash, cash equivalents and restricted cash ( 21,658 ) ( 14,092 )

Cash, cash equivalents and restricted cash at beginning of period 263,624 312,553

6 unchanged sentences

Pawn loans forfeited and transferred to inventory $ 70,966 $ 50,921

Transfer of consideration for current period acquisition 1,547 —

Acquisition earn-out contingency 4,608 —

Accrued acquisition consideration held as restricted cash 5,824 —

See accompanying notes to unaudited interim condensed consolidated financial statements.

9 unchanged sentences

GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended September 30, 2020 , filed with the SEC on December 14, 2020 (“2020 Annual Report”).

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete financial statements.

These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended September 30, 2021, filed with the SEC on November 17, 2021 (“2021 Annual Report”).

In the opinion of management, the accompanying Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation.

Financial results for the three and nine-month periods ended June 30, 2021, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2021.

Our business is subject to seasonal variations, and operating results for the three and nine months ended June 30, 2021 and 2020 (the "current quarter" and "prior-year quarter," respectively) are not necessarily indicative of the results of operations for the full fiscal year.

There have been no changes that have had a material impact in significant accounting policies as described in our Annual Report on Form 10-K for the year ended September 30, 2020 .

Financial results for the three-month period ended December 31, 2021, are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2022.

Our business is subject to seasonal variations, and operating results for the three months ended December 31, 2021 and 2020 (the "current quarter" and "prior-year quarter," respectively) are not necessarily indicative of the results of operations for the full fiscal year.

There have been no changes that have had a material impact in significant accounting policies as described in our Annual Report on Form 10-K for the year ended September 30, 2021 except for as disclosed below related to the adoption of ASU 2020-06.

Principles of Consolidation

4 unchanged sentences

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

Reclassifications

We have reclassified certain amounts in prior-period financial statements to conform to the current period presentation.

Use of Estimates

5 unchanged sentences

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.

and global economies, as disclosed in our 2021 Annual Report on Form 10-K.

The full extent and duration of the COVID-19 impact on the global economy generally, and on our business specifically, is currently unknown.

The impact of the pandemic, and the recovery therefrom, continued to adversely effect net revenues and earnings into fiscal 2021.

During the latter part of fiscal 2021, we saw pawn transaction activity continue to rebuild, driving PLO balances closer to pre-pandemic levels, which will drive accelerating PSC revenue in the coming quarters given the natural lag between pawn originations and related fees.

We continue to assess what type of impact the recent surge of the COVID-19 Omicron variant will have to our business, net revenues and operating expenses in fiscal year 2022.

A prolonged pandemic and recovery may have an adverse effect on our results of operations, 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 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 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”).

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.

Additionally, ASU 2020-06 eliminates beneficial conversion feature and cash conversion models resulting in more convertible instruments being accounted for as a single unit.

The ASU 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 early adopted this standard on October 1, 2021 under the modified retrospective basis.

Impact of the Adoption of ASU 2020-06

On October 1, 2021, we early adopted ASU 2020-06 on a modified retrospective basis.

Under ASU 2020-06, we no longer separate the convertible senior notes into liability and equity components.

We recognized the cumulative effect of initially applying this new standard as of October 1, 2021.

We recognized a cumulative effect of initially applying the ASU as an adjustment to the October 1, 2021 opening balance of retained earnings.

The conversion option that was previously accounted for in equity under the cash conversion model was recombined into the convertible debt outstanding, and as a result, additional paid in capital and the related unamortized debt discount on the convertible senior notes were reduced.

The removal of the remaining debt discounts recorded for this previous separation has the effect of increasing our net debt balance.

The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

(in thousands) As Reported

September 30, 2021 Adjustments Under ASU 2020-06

October 1, 2021

Principal $ 316,250 $ — $ 316,250

Unamortized debt discount ( 48,785 ) 48,785 —

Deferred financing costs, net ( 3,279 ) ( 1,500 ) ( 4,779 )

Net carrying amount 264,186 47,285 311,471

Deferred tax asset 9,746 5,839 15,585

Deferred tax liability 3,684 ( 4,040 ) ( 356 )

Additional paid-in capital 403,312 ( 64,263 ) 339,049

Retained earnings 326,781 26,857 353,638

The impact of adoption on our condensed consolidated statements of operations for the three months ended December 31, 2021 was primarily to decrease interest expense by $ 3.4 million.

This had the effect of increasing our basic earnings per share for the three months ended December 31, 2021 by $ 0.05 , and decreasing our diluted earnings per common share for the three months ended December 31, 2021 by $ 0.02 .

Additionally, adoption of the standard requires interest charges on the convertible debt to be added to net income as well as the use of the “if-converted” method to calculate diluted earnings per common share.

Refer to Note 4:

Earnings Per Share for effect of the convertible notes on diluted earnings per common share.

Recently Issued Accounting Pronouncements

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):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S.

ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of our annual fiscal year.

We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact on our consolidated financial statements.

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, operating under the name "Cash Apoyo Efectivo," are located principally in the Mexico City metropolitan area and have strong brand recognition in that market.

This is our largest acquisition to date in terms of store-count.

We now operate a total of 1,143 pawn stores, 627 of which are in Latin America, including 503 in Mexico.

The total consideration paid for Bajio was $ 23.6 million, consisting of cash of $ 17.4 million, of which $ 11.6 million was paid in cash at closing and the remaining $ 5.8 million is accrued and held as restricted cash to be paid out per the acquisition agreement and 212,870 shares of our Class A Non-Voting Common Stock valued at $ 1.6 million.

In addition, t he sellers may be entitled to additional payments of up to $ 4.6 million over the next two years , contingent on the performance of the acquired stores with growing its loan portfolio.

We recorded this earn-out contingency as part of the total consideration as the metrics are considered achievable by Management.

We also repaid $ 14.9 million of Bajio’s existing debt assumed in the acquisition on June 9, 2021.

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

At the time of acquisition, 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, the 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 2021.

During the first quarter of 2022, both parties completed the formal working capital reconciliation stipulated within the purchase agreement.

As part of the working capital reconciliation, the Company and the seller agreed to reduce the purchase price, which was held in restricted cash as of September 30, 2021, by $ 1.3 million.

As the working capital adjustment was recorded as of September 30, 2021, this reduction to the purchase price is a measurement period adjustment, and resulted in a $ 1.3 million reduction to goodwill during the period ended December 31, 2021.

This reduced the total consideration for Bajio to $ 22.3 million.

As the future payments decreased, we released $ 1.3 million of the previously held $ 2.0 million in restricted cash to our unrestricted cash.

Of the remaining $ 0.7 million in restricted cash, $ 0.3 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 estimated fair value of the assets acquired and liabilities assumed are provisional as management is still gathering additional information to complete the purchase accounting.

The preliminary allocation of the consideration for the net acquired assets from this business combination were as follows, in thousands:

The purchase price allocation is as follows, in thousands:

Cash and cash equivalents $ 308

Earning assets 9,462

Lease right-of-use assets 10,826

Pawn loans 4,619

Pawn service charges receivable 1,335

Inventory 1,319

Property and equipment 2,025

Intangible assets* 3,965

Right-of-use assets 10,651

Goodwill 24,778

Intangible assets 3,965

Deferred tax asset, net 381

Other assets 746

Accounts payable, deferred taxes and other liabilities ( 3,150 )

Lease liability ( 10,826 )

Assumed debt ( 14,931 )

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

Debt ( 14,931 )

Lease liabilities ( 10,651 )

Total consideration $ 22,255

*Intangible assets consist of $ 4.0 million in 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 June 9, 2021 through June 30, 2021, and are reported in our Latin America Pawn segment.

The acquired business contributed revenues of $ 1.7 million and net income of $ 0.1 million to us for the period from June 9, 2021 to June 30, 2021.

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.

Three Months Ended

Nine Months Ended

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

Revenue $ 180,854 $ 216,083 $ 558,426 $ 681,069

Net (loss) income ( 2,475 ) ( 5,354 ) 6,775 ( 42,628 )

Basic (loss) earnings per common share ( 0.04 ) ( 0.10 ) 0.12 ( 0.75 )

Diluted (loss) earnings per common share ( 0.04 ) ( 0.10 ) 0.12 ( 0.75 )

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.

These pro forma amounts have been calculated after applying the Company's accounting policies and adjusting the results to reflect the additional amortization that would have been incurred assuming the amortization of the trade name had been applied from October 1, 2019.

During the three and nine months ended June 30, 2021, we incurred total acquisition costs of $ 0.2 million and $ 0.4 million, respectively.

The acquisition costs were primarily related to legal, accounting and consulting services, were expensed as incurred through June 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, providing an immediate market-leading position in the South Houston area and enhancing our already strong position in the strategically important Houston metro market.

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

EXPECTED CREDIT LOSSES

We adopted ASU 2016-13 effective October 1, 2020.

We have financing receivables within the scope of ASU 2016-13, specifically pawn loans receivables and related pawn service charges receivables.

Our pawn loans are short-term in nature, typically 30-120 days for U.S.

Pawn loans and 30 days for Latin America Pawn loans.

Under our existing accounting policy, if a pawn loan is deemed to be uncollectible, we do not recognize an allowance for doubtful accounts due to the expected recovery of the loan principal amount through the sale of the collateral.

We record the forfeited collateral as inventory at the pawn loan principal amount.

Pawn service charges are recorded under the interest method over the term of the related pawn loan.

Under our existing accounting policy, we accrue for any earned but unpaid pawn service charges at the end each month.

We then apply a reserve to pawn service charges receivable at the end of each month using a pawn loan forfeiture rate derived from a trailing twelve-month average, adjusted for seasonality factors.

We have evaluated, on a collective basis, our pawn loan receivables and pawn service charges receivables and determined the new credit loss standard did not have a material impact on our consolidated financial statements, as our current polices appropriately capture lifetime expected credit losses.

The presentation of pawn loan and pawn service charge receivable as separate line items on our consolidated balance sheet will remain unchanged under the new credit loss standard.

As of June 30, 2021, pawn loan and related pawn service charges receivable, net were $ 157.2 million and $ 25.0 million, respectively.

Intangible assets acquired consist of indefinite-lived trade names.

The following table summarizes the changes in the carrying amount of goodwill by segment and in total:

Nine Months Ended June 30, 2021

Three Months Ended December 31, 2021

(in thousands) U.S.

1 unchanged sentence

Balances as of September 30, 2021

Acquisitions 2,394 22,957 25,351

$ 244,471 $ 41,287 $ 285,758

Measurement period adjustments — ( 1,322 ) ( 1,322 )

Effect of foreign currency translation changes — 183 183

Balances as of June 30, 2021 $ 244,322 $ 39,297 $ 283,619

Nine Months Ended June 30, 2020

Balances as of December 31, 2021 $ 244,471 $ 40,148 $ 284,619

Three Months Ended December 31, 2020

(in thousands) U.S.

1 unchanged sentence

Balances as of September 30, 2020

$ 241,928 $ 15,654 $ 257,582

Effect of foreign currency translation changes — 871 871

Measurement period adjustments 176 ( 149 ) 27

Impairment charge ( 10,000 ) ( 31,340 ) ( 41,340 )

Balances as of June 30, 2020 $ 241,928 $ 15,398 $ 257,326

OTHER CHARGES

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 us for sustainable growth.

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

We recorded $ 20.4 million of such charges for the quarter ended September 30, 2020, and had accrued charges of $ 10.7 million remaining at September 30, 2020.

We recorded $ 0.5 million of charges for the three months ended June 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 March 31, 2021 Charges Payments and Adjustments Accrued Charges at June 30, 2021

Cash charges:

Labor reduction costs $ 5,946 $ — $ ( 3,418 ) $ 2,528 $ — $ ( 1,454 ) $ 1,074

CASHMAX shutdown costs 800 — ( 800 ) — — — —

Store closure costs 1,806 — ( 1,806 ) — 497 — 497

Other 2,166 — ( 166 ) 2,000 — — 2,000

Balances as of December 31, 2020

$ 241,928 $ 16,525 $ 258,453

2 unchanged sentences

Three Months Ended

Nine Months Ended

(in thousands, except per share amounts) 2021 2020

Net (loss) income $ ( 2,570 ) $ ( 5,487 ) $ 7,059 $ ( 45,123 )

Earnings per common share

Average common share outstanding (denominator) 55,898 55,068 55,639 55,395

(Loss) earnings per common share $ ( 0.05 ) $ ( 0.10 ) $ 0.13 $ ( 0.81 )

Basic earnings per common share:

Net income - basic $ 15,721 $ 4,299

Weighted shares outstanding - basic 56,183 55,361

Basic earnings per common share $ 0.28 $ 0.08

Diluted earnings per common share:

Average common share outstanding 55,898 55,068 55,639 55,395

Dilutive effect of restricted stock and convertible notes* — — 14 —

Diluted average common shares outstanding (denominator) 55,898 55,068 55,653 55,395

Diluted (loss) earnings per common share $ ( 0.05 ) $ ( 0.10 ) $ 0.13 $ ( 0.81 )

Net income - basic $ 15,721 $ 4,299

Convertible Notes interest expense, net of tax 1,884 —

Net income - diluted $ 17,605 $ 4,299

Weighted shares outstanding - basic 56,183 55,361

Effect of dilution from equity-based compensation awards* 541 67

Effect of dilution from if-converted Convertible Notes** 25,224 —

Weighted shares outstanding - diluted 81,948 55,428

Diluted earnings per common share $ 0.21 $ 0.08

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

Restricted stock*** 1,936 657

* Includes time-based share-based awards and Convertible Notes.

See Note 10 for discussion of the terms and conditions of the potential impact of the 2024 Convertible Notes and 2025 Convertible Notes.

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

* Includes time-based share-based awards and performance based awards for which targets for fiscal year tranches have been achieved and vesting is subject only to achievement of service conditions.

** See Note 8 for conversion price and initial conversion rate of the 2024 Convertible Notes and 2025 Convertible Notes.

*** Includes antidilutive share-based awards as well as performance-based share-based awards that are contingently issuable, but for which the condition for issuance has not been met as of the end of the reporting period.

As a result of our adoption of ASU 2020-06 on October 1, 2021, the dilutive impact of the Convertible Notes for our calculation of diluted net income per share is considered using the if-converted method.

During the three months ended December 31, 2021, we increased net income by $ 1.9 million to arrive at the numerator used to calculate diluted earnings per common share, which represents interest expense recognized on the convertible notes that were subject to this change in methodology.

For periods prior to our October 1, 2021 adoption of ASU 2020-06, we applied the treasury stock method to account for the dilutive impact of the 2024 and 2025 Convertible Notes for diluted earnings per share purposes .

We determine if a contract contains a lease at inception.

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The table below presents balances of our operating leases:

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

(in thousands) December 31, 2021 December 31, 2020 September 30,

Right-of-use asset $ 201,527 $ 177,308 $ 200,990

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Three Months Ended

Nine Months Ended

(in thousands) 2021 2020

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Variable lease expense 3,542 3,045

( 845 ) — ( 2,570 ) —

Total lease expense $ 19,904 $ 18,244

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Other supplemental information includes the following for our operating leases:

Nine Months Ended

Three Months Ended

Weighted-average remaining contractual lease term (years)

Weighted-average incremental borrowing rate 8.10 % 7.85 %

Maturities of lease liabilities as of June 30, 2021 were as follows (in thousands):

Maturities of lease liabilities as of December 31, 2021 were as follows (in thousands):

Remaining 2022 $ 50,171

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Non-current portion $ 161,841

We recorded $ 33.5 million and $ 10.1 million in non-cash additions to our right of use assets and lease liabilities for the nine months ended June 30, 2021 and June 30, 2020, respectively.

We recorded $ 14.3 million and $ 1.6 million in non-cash additions to our right of use assets and lease liabilities for the three months ended December 31, 2021 and December 31, 2020, respectively.

STRATEGIC INVESTMENTS

On April 14, 2021, we received an additional 9,519,277 shares in Cash Converters International Limited ("Cash Converters International") resulting from the reinvestment of a dividend, bringing our total ownership to 223,702,991 shares, or 35.65 % of Cash Converters International as of June 30, 2021.

The following tables present summary financial information for Cash Converters International’s most recently reported results at December 31, 2020 after translation to U.S.

Cash Converters International Limited

On October 1, 2021, we purchased an additional 13 million shares of Cash Converters International Limited ("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, on October 14, 2021, we received a cash dividend of $ 1.7 million from Cash Converters.

The following tables present summary financial information for Cash Converters most recently reported results at June 30, 2021 after translation to U.S.

(in thousands) 2021 2020

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Total liabilities and shareholders’ equity $ 359,341 $ 330,016

Half-Year Ended December 31,

Half-Year Ended June 30,

(in thousands) 2021 2020

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Net profit (loss) 12,081 ( 7,032 )

See Note 9 for the fair value and carrying value of our investment in Cash Converters International.

See Note 7 for the fair value and carrying value of our investment in Cash Converters.

Founders One, LLC

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.

The investment in Founders is a variable interest entity but for which the Company is not the primary beneficiary and, therefore, is not consolidated.

Further, as we are not the appointed manager, we do not have the ability to direct the activities of the investment entity that most significantly impact its economic performance.

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

Our $ 15.0 million carrying value of the investment is included in “Other Investments” in our consolidated balance sheets.

The Company’s maximum exposure for losses in this investment is its contributed investment of $ 15.0 million.

See Note 7 for the fair value and carrying value of our investment in Founders.

FAIR VALUE MEASUREMENTS

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There were no transfers in or out of Level 1, Level 2 or Level 3 for financial assets or liabilities measured at fair value on a recurring basis during the periods presented.

Fair Value Measurement on a Recurring Basis

As of June 30, 2021, June 30, 2020 and September 30, 2020, we did not have any financial assets or liabilities measured at fair value on a recurring basis.

Financial Assets and Liabilities Not Measured at Fair Value

The tables below present our estimates of fair value of financial assets and liabilities that were not measured at fair value on a recurring basis:

The tables below present our estimates of fair value of financial assets and liabilities that were not measured at fair value:

Carrying Value Estimated Fair Value

June 30, 2021 June 30, 2021 Fair Value Measurement Using

December 31, 2021 December 31, 2021 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

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Investments in unconsolidated affiliates 42,513 52,671 45,650 — 7,021

Other investments 16,500 16,500 — — 16,500

Financial liabilities:

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Carrying Value Estimated Fair Value

June 30, 2020 June 30, 2020 Fair Value Measurement Using

December 31, 2020 December 31, 2020 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

Financial assets:

Notes receivable from Grupo Finmart, net $ 3,866 $ 3,945 $ — $ — $ 3,945

2.89 % promissory note receivable due April 2024

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816 816 — — 816

CASHMAX secured borrowing facility ( 171 ) 295 — — 295

Carrying Value Estimated Fair Value

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

8.5 % unsecured debt due 2024

872 872 — — 872

Due to the short-term nature of cash and cash equivalents, pawn loans, pawn service charges receivable and other debt, we estimate that the 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.

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 2:

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 March 2019, we received $ 1.1 million in previously escrowed seller funds as a result of settling certain indemnification claims with the seller of GPMX.

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

The note approximated its carrying value as of June 30, 2021.

The fair value of the note approximated its carrying value as of December 31, 2021.

We use the equity method of accounting to account for our 37.72 % ownership in Cash Converters International.

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.

We use the equity method of accounting to account for our 13.14 % ownership in Rich Data Corporation, a previously consolidated variable interest entity for which we no longer have the power to direct the activities that most significantly affect its economic performance.

We believe its fair value approximates carrying value although such fair value is highly variable and includes significant unobservable inputs.

We believe its fair value approximated carrying value although such fair value is highly variable and includes significant unobservable inputs.

Of the $ 16.5 million included in the table above, $ 15.0 million is related the investment in Founders.

We believe the investment's fair value approximated it's carrying value although such fair value is highly variable and includes significant unobservable inputs .

We measured the fair value of the 2024 and 2025 Convertible Notes using quoted price inputs.

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As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease.

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 June 30, 2021.

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 Company adopted ASU 2020-06 on October 1, 2021.

See Note 1 for further discussion of this recently adopted accounting policy.

The following table presents the Company's debt instruments outstanding:

June 30, 2021 June 30, 2020 September 30, 2020

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

December 31, 2021 December 31, 2020 September 30, 2021

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

2024 Convertible Notes $ 143,750 $ ( 1,644 ) $ 142,106 $ 143,750 $ ( 25,014 ) $ 118,736 $ 143,750 $ ( 20,207 ) $ 123,543

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— — — 816 — 816 — — —

CASHMAX secured borrowing facility* — — — 295 ( 466 ) ( 171 ) — — —

Total $ 316,250 $ ( 4,406 ) $ 311,844 $ 317,066 $ ( 62,531 ) $ 254,535 $ 316,250 $ ( 52,064 ) $ 264,186

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Total long-term debt $ 316,250 $ ( 4,406 ) $ 311,844 $ 316,853 $ ( 62,531 ) $ 254,322 $ 316,250 $ ( 52,064 ) $ 264,186

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

Certain disclosures omitted due to materiality considerations.

The following table presents the Company's contractual maturities related to the debt instruments as of June 30, 2021:

* Amount translated from Guatemalan quetzals as of applicable period end.

Debt was repaid before maturity the date in January 2021.

The following table presents the Company's contractual maturities related to the debt instruments as of December 31, 2021:

Schedule of Contractual Maturities

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$ 316,250 $ — $ 143,750 $ 172,500 $ —

* Excludes the potential impact of embedded derivatives as discussed below.

The following table presents the Company's interest expense related to the Convertible Notes for the three and nine months ended June 30, 2021 and 2020:

The following table presents the Company's interest expense related to the Convertible Notes for the three months ended December 31, 2021 and 2020:

Three Months Ended

Nine Months Ended

(in thousands) 2021 2020

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Contractual interest expense $ 1,033 $ 1,033

Amortization of debt discount and deferred financing costs 1,602 1,484 4,716 4,370

Amortization of deferred financing costs 167 112

Amortization of debt discount — 1,430

Total interest expense $ 1,200 $ 2,575

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Contractual interest expense $ 1,024 $ 1,024

Amortization of debt discount and deferred financing costs 1,886 1,754 5,558 5,168

Amortization of deferred financing costs 207 140

Amortization of debt discount — 1,679

Total interest expense $ 1,231 $ 2,843

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At maturity, the holders of the 2024 Convertible Notes will be entitled to receive cash equal to the principal of the 2024 Convertible Notes plus accrued interest.

The carrying amount of the 2024 Convertible Notes as a separate equity-classified instrument (the “2024 Convertible Notes Embedded Derivative”) included in “Additional paid-in capital” in our condensed consolidated balance sheets as of June 30, 2021 was $ 39.8 million, ($ 25.3 million, net of tax).

The effective interest rate for the three and nine months ended June 30, 2021 was approximately 9 %.

As of June 30, 2021, the remaining unamortized debt discount and issuance costs will be amortized through the 2024 Maturity Date assuming no early conversion.

The 2024 Convertible Notes are convertible into cash or shares of Class A Common Stock, or any combination thereof, at our option subject to satisfaction of certain conditions and during the periods described in the 2017 Indenture, based on an initial conversion rate of 100 shares of Class A Common Stock per $1,000 principal amount of 2024 Convertible Notes (equivalent to an initial conversion price of $ 10.00 per share of Class A Common Stock).

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

To the extent the average share price is over $ 10.00 per share for any fiscal quarter, we are required to recognize incremental dilution of our earnings per share.

If, among other triggers described in the 2017 Indenture, the market price of the Class A Common Stock meets the threshold based on at least 20 of the final 30 trading days of the quarter for the 2024 Convertible Notes to become convertible at the option of the holders during the subsequent quarter, we may be required to classify the 2024 Convertible Notes as current on our condensed consolidated balance sheets for each quarter in which such triggers are met.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of June 30, 2021.

As of June 30, 2021, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount.

The effective interest rate for the three months ended December 31, 2021 was approximately 3.35 %.

As of December 31, 2021, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2024 Maturity Date assuming no early conversion.

The 2024 Convertible Notes are convertible based on an initial conversion rate of 100 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $ 10.00 per share).

The conversion rate will not be adjusted for any accrued and unpaid interest.

The 2024 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments.

Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.

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;

(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;

(3) if we call any or all of the 2024 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date;

or (4) upon the occurrence of specified corporate events, as defined in the 2017 Indenture.

On or after January 1, 2024 until the close of business on the business day immediately preceding the 2024 Maturity Date, holders of 2024 Convertible Notes may, at their option, convert their 2024 Convertible Notes at any time, regardless of the foregoing circumstances.

At our option, we may redeem for cash all or any portion of the 2024 Convertible Notes on or after July 6, 2021, 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.

The redemption price will be equal to 100 % of the principal amount of the 2024 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2021.

As of December 31, 2021, the if-converted value of the 2024 Convertible Notes did not exceed the principal amount.

2.375 % 2025 Convertible Senior Notes Due 2025

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The 2025 Convertible Notes pay interest semi-annually in arrears at a rate of 2.375 % per annum on May 1 and November 1 of each year, commencing November 1, 2018, and mature on May 1, 2025 (the "2025 Maturity Date"), unless converted, redeemed or repurchased in accordance with the terms prior to such date.

The carrying amount of the 2025 Convertible Notes as a separate equity-classified instrument (the “2025 Convertible Notes Embedded Derivative”) included in “Additional paid-in capital” in our condensed consolidated balance sheets as of June 30, 2021 was $ 49.6 million, ($ 39.1 million, net of tax).

The effective interest rate for the three and nine months ended June 30, 2021 was approximately 9 %.

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

The 2025 Convertible Notes are convertible into cash or shares of Class A Common Stock, or any combination thereof, at our option subject to satisfaction of certain conditions and during the periods described in the 2018 Indenture, based on an initial conversion rate of 62.8931 shares of Class A Common Stock per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of $ 15.90 per share of Class A Common Stock).

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

To the extent the average share price is over $ 15.90 per share for any fiscal quarter or year-to-date period, we are required to recognize incremental dilution of our earnings per share.

If, among other triggers described in the 2018 Indenture, the market price of the Class A Common Stock meets the threshold based on at least 20 of the final 30 trading days of the quarter for the 2025 Convertible Notes to become convertible at the option of the holders during the subsequent quarter, we may be required to classify the 2025 Convertible Notes as current on our condensed consolidated balance sheets for each quarter in which such triggers are met.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of June 30, 2021.

As of June 30, 2021, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

CASHMA X Secured Borrowing Facility

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.

See our 2020 Annual Report for additional information regarding the closure of our Canadian operations.

The effective interest rate for the three months ended December 31, 2021 was approximately 2.88 % for the 2025 Convertible Notes.

As of December 31, 2021, the remaining unamortized debt issuance costs will be amortized using the effective interest method through the 2025 Maturity Date assuming no early conversion.

The 2025 Convertible Notes are convertible based on an initial conversion rate of 62.8931 shares of Class A Common Stock per $1,000 principal amount (equivalent to an initial conversion price of $ 15.90 per share).

The conversion rate will not be adjusted for any accrued and unpaid interest.

The 2025 Convertible Notes contain certain make-whole fundamental change premiums and customary anti-dilution adjustments.

Upon conversion, we may settle in cash, shares of Class A Common Stock or any combination thereof, at our election.

Prior to November 1, 2024, the 2025 Convertible Notes are convertible only under the following circumstances:

(1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2018 (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;

(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 2018 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;

(3) if we call any or all of the 2025 Convertible Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date;

or (4) upon the occurrence of specified corporate events, as defined in the 2018 Indenture.

On or after November 1, 2024 until the close of business on the business day immediately preceding the 2025 Maturity Date, holders of 2025 Convertible Notes may, at their option, convert their 2025 Convertible Notes at any time, regardless of the foregoing circumstances.

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.

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.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of December 31, 2021.

As of December 31, 2021, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

SHARE-BASED COMPENSATION

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In December 2019, the Company's 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 related to the COVID-19 pandemic.

No share repurchases under the program have been made during fiscal 2021.

During fiscal 2020, we repurchased and retired 943,149 shares of our Class A Common Stock for $ 5.2 million, which was allocated between "Additional paid-in capital" and "Retained earnings" in our condensed consolidated balance sheets.

Repurchases under the program were suspended in March 2020 in order to preserve liquidity as a result of uncertainties related to the COVID-19 pandemic and no further share repurchases have been made since March of 2020.

Stock Compensation

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Awards granted under the Incentive Plan 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 December 2020, we granted 143,145 restricted stock awards to our non-employee directors at a grant date fair value of $ 5.03 .

These awards vested in February 2021 ( 79,525 awards) and March 2021 ( 63,620 awards).

In February 2021, we granted 127,744 restricted stock awards to our non-employee directors at a grant date fair value of $ 5.01 , which awards will vest at the next annual meeting of stockholders, but no later than March 31, 2022.

In January 2021, we granted 289,592 restricted stock awards to employees at a grant date fair value of $ 4.68 and 275,107 restricted stock awards to employees at a grant date fair value of $ 4.71 .

These awards vest on September 30, 2021 and September 30, 2022, respectively.

In February 2021, we granted 392,419 restricted stock awards to employees at a grant date fair value of $ 4.96 , which vest on September 30, 2023.

During the first quarter of fiscal 2020, we granted 222,912 shares of restricted stock awards to non-employee directors based on a share price of $ 6.46 .

These awards vested on September 30, 2020.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law and includes certain income tax provisions relevant to businesses.

We recognized the effect on the consolidated financial statements in the period ended March 31, 2020.

For the period ended June 30, 2021, the CARES Act has not had a material impact on our consolidated financial statements.

At this time, we do not expect the impact of the CARES Act to have a material impact on our consolidated financial statements for the year ending September 30, 2021.

COMMITMENTS AND CONTINGENCIES

The following table presents a summary of stock compensation activity:

Shares Weighted

Outstanding as of September 30, 2021

2,218,777 $ 4.86

Granted 1,208,046 7.65

( 358,883 ) 4.68

Cancelled — —

Outstanding as of December 31, 2021

3,067,940 $ 5.86

(a) 101,103 shares were withheld to satisfy related income tax withholding.

CONTINGENCIES

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

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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.

Rather, Lana offers support activities to U.S.

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 our segments as follows:

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

• Other International — primarily our equity interest in the net income of Cash Converters International and Rich Data Corporation.

• Other Investments — primarily our equity interest in the net income of Cash Converters International and Rich Data Corporation along with our investment in Founders.

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.

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

Three Months Ended June 30, 2021

Three Months Ended December 31, 2021

(in thousands) U.S.

Pawn Latin America Pawn Other International Total Segments Corporate Items Consolidated

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 102,078 $ 35,642 $ — $ 137,720 $ — $ 137,720

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Jewelry scrapping cost of goods sold 3,975 1,797 — 5,772 — 5,772

Other cost of revenues — — — — — —

Net revenues 101,830 30,238 43 132,111 — 132,111

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Depreciation and amortization 2,670 1,980 — 4,650 2,924 7,574

Other charges — 497 — 497 — 497

Loss on sale or disposal of assets and other — 5 — 5 — 5

Interest expense — — — — 2,431 2,431

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Income (loss) before income taxes $ 42,151 $ ( 20,804 ) $ 21,347

Three Months Ended June 30, 2020

(in thousands) U.S.

Pawn Latin America Pawn Other International Total Segments Corporate Items Consolidated

Merchandise sales $ 116,258 $ 20,279 $ — $ 136,537 $ 136,537

Jewelry scrapping sales 17,129 3,174 — 20,303 — 20,303

Pawn service charges 41,069 11,391 — 52,460 — 52,460

Other revenues 40 — 884 924 — 924

Total revenues 174,496 34,844 884 210,224 — 210,224

Merchandise cost of goods sold 75,838 16,021 — 91,859 — 91,859

Jewelry scrapping cost of goods sold 12,875 3,283 — 16,158 — 16,158

Other cost of revenues — 32 — 32 — 32

Net revenues 85,783 15,508 884 102,175 — 102,175

Segment and corporate expenses (income):

Store expenses 66,243 15,041 1,057 82,341 — 82,341

General and administrative — — — — 16,176 16,176

Depreciation and amortization 2,749 1,647 3 4,399 3,280 7,679

(Gain) loss on sale or disposal of assets and other 234 23 ( 20 ) 237 18 255

Interest expense — — 140 140 5,239 5,379

Interest income — ( 404 ) — ( 404 ) ( 224 ) ( 628 )

Equity in net income of unconsolidated affiliates — — 1,183 1,183 — 1,183

Other (income) expense — ( 61 ) ( 5 ) ( 66 ) 94 28

Segment contribution (loss) $ 16,557 $ ( 738 ) $ ( 1,474 ) $ 14,345

Loss before income taxes $ 14,345 $ ( 24,583 ) $ ( 10,238 )

Nine Months Ended June 30, 2021

Three Months Ended December 31, 2020

(in thousands) U.S.

Pawn Latin America Pawn Other International Total Segments Corporate Items Consolidated

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 82,253 $ 25,530 $ — $ 107,783 $ — $ 107,783

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Depreciation and amortization 2,736 1,860 — 4,596 2,976 7,572

Loss on sale or disposal of assets and other 27 — — 27 63 90

Other charges — 497 — 497 — 497

Loss (gain) on sale or disposal of assets and other 27 ( 101 ) — ( 74 ) 52 ( 22 )

Interest expense — — — — 5,455 5,455

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Income (loss) before income taxes $ 26,504 $ ( 21,002 ) $ 5,502

Nine Months Ended June 30, 2020

(in thousands) U.S.

Pawn Latin America Pawn Other International Total Segments Corporate Items Consolidated

Merchandise sales $ 314,059 $ 79,036 $ — $ 393,095 $ — $ 393,095

Jewelry scrapping sales 32,905 8,804 — 41,709 — 41,709

Pawn service charges 166,859 50,548 — 217,407 — 217,407

Other revenues 107 50 3,570 3,727 — 3,727

Total revenues 513,930 138,438 3,570 655,938 — 655,938

Merchandise cost of goods sold 202,488 59,223 — 261,711 — 261,711

Jewelry scrapping cost of goods sold 25,430 8,099 — 33,529 — 33,529

Other cost of revenues — 69 1,024 1,093 — 1,093

Net revenues 286,012 71,047 2,546 359,605 — 359,605

Segment and corporate expenses (income):

Store expenses 201,921 53,493 3,850 259,264 — 259,264

General and administrative — — — — 50,355 50,355

Impairment of goodwill, intangible and other assets 10,000 35,936 1,124 47,060 — 47,060

Depreciation and amortization 8,325 5,476 60 13,861 9,313 23,174

(Gain) loss on sale or disposal of assets and other 234 ( 72 ) ( 20 ) 142 1,118 1,260

Interest expense — 430 464 894 15,695 16,589

Interest income — ( 1,161 ) — ( 1,161 ) ( 1,251 ) ( 2,412 )

Equity in net loss of unconsolidated affiliates — 5,896 5,896 — 5,896

Other (income) expense — ( 303 ) 14 ( 289 ) 74 ( 215 )

Segment contribution (loss) $ 65,532 $ ( 22,752 ) $ ( 8,842 ) $ 33,938

Income (loss) before income taxes $ 33,938 $ ( 75,304 ) $ ( 41,366 )

SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

The following table provides supplemental information on net amounts included in our condensed consolidated balance sheets:

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

(in thousands) December 31, 2021 December 31, 2020 September 30,

Gross pawn service charges receivable $ 38,040 $ 31,721 $ 37,360

12 unchanged sentences

Accounts payable $ 18,925 $ 17,169 $ 22,462

Accrued expenses and other 65,641 43,054 52,390

Accrued payroll 11,486 12,061 9,093

Incentive accrual 5,158 3,866 16,868

Other payroll related expenses 7,964 10,798 10,695

Accrued sales and VAT taxes 9,704 10,295 10,936

Accrued Income Taxes Payable 6,024 611 3,826

Other current liabilities 16,270 12,977 16,388

Accounts payable, accrued expenses and other current liabilities $ 75,531 $ 67,777 $ 90,268

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-Q

Item 1. Financial Statements