What changed in this filing

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Item 1. Financial Statements

2022-05-04 compared with 2022-02-02 · 195 added, 97 removed, 529 unchanged (36% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

September 30,

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Total assets $ 1,299,996 $ 1,196,253 $ 1,266,911

Liabilities and equity:

Liabilities and stockholders' equity:

Current liabilities:

Current maturities of long-term debt, net $ — $ 213 $ —

Accounts payable, accrued expenses and other current liabilities $ 69,695 $ 69,019 $ 90,268

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issued and outstanding:

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

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

53,685,333 as of March 31, 2022;

52,873,568 as of March 31, 2021;

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

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Accumulated other comprehensive loss ( 51,710 ) ( 58,551 ) ( 58,415 )

Total equity 654,501 664,502 672,238

Total liabilities and equity $ 1,280,321 $ 1,197,164 $ 1,266,911

Total stockholders' equity 675,016 669,244 672,238

Total liabilities and stockholders' equity $ 1,299,996 $ 1,196,253 $ 1,266,911

See accompanying notes to unaudited interim condensed consolidated financial statements

1 unchanged sentence

Three Months Ended

Six Months Ended

(in thousands, except per share amount) 2022 2021 2022 2021

2 unchanged sentences

Pawn service charges 76,683 63,436 152,708 126,925

Other revenues 305 104

Other revenues, net 53 203 358 307

Total revenues 215,982 184,939 436,976 363,074

6 unchanged sentences

Depreciation and amortization 7,450 8,089 15,024 15,661

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

(Gain) loss on sale or disposal of assets and other ( 697 ) 112 ( 692 ) 90

Total operating expenses 104,723 103,121 214,618 202,490

2 unchanged sentences

Interest income ( 255 ) ( 585 ) ( 559 ) ( 1,406 )

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

Other income ( 120 ) ( 599 )

Equity in net loss (income) of unconsolidated affiliates 1,439 ( 1,250 ) 301 ( 1,766 )

Other expense (income) 371 145 251 ( 454 )

Income before income taxes 20,123 6,799 41,470 12,301

8 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands) 2022 2021 2022 2021

9 unchanged sentences

Earnings Accumulated

Comprehensive Loss Total Equity

Comprehensive Loss Total Stockholders' Equity

(in thousands) Shares Par Value

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

Stock compensation — — 460 — — 460

Transfer of consideration for other investment 213 2 1,498 — — 1,500

Release of restricted stock 129 2 — — — 2

Foreign currency translation gain — — — — 3,666 3,666

Net income — — — 14,887 — 14,887

Balances as of March 31, 2022 56,656 $ 567 $ 341,913 $ 384,246 $ ( 51,710 ) $ 675,016

Common Stock Additional

1 unchanged sentence

Earnings Accumulated

Comprehensive Loss Total Equity

Comprehensive Loss Total Stockholders' Equity

(in thousands) Shares Par Value

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

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

See accompanying notes to unaudited interim condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands) 2022 2021

9 unchanged sentences

Stock compensation expense 2,158 1,618

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

Equity in net loss (income) of unconsolidated affiliates 301 ( 1,766 )

Changes in operating assets and liabilities:

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Dividends from unconsolidated affiliates 1,660 —

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

Net cash provided by operating activities 30,575 18,721

Investing activities:

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Investment in other investments ( 16,500 ) —

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

Net cash (used in) provided by investing activities ( 31,887 ) 9,080

Financing activities:

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Effect of exchange rate changes on cash and cash equivalents and restricted cash 2,157 5,000

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

Net increase in cash, cash equivalents and restricted cash 53 31,091

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

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Pawn loans forfeited and transferred to inventory $ 134,562 $ 99,285

Transfer of consideration for other investment 1,500 —

See accompanying notes to unaudited interim condensed consolidated financial statements

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Description of Business

(collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) is a leading provider of pawn loans in the United States and Latin America.

(collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) is a leading provider of pawn loans in the United States ("U.S.") and Latin America.

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

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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”).

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 Securities and Exchange Commission ("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-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.

Financial results for the three and six-month period ended March 31, 2022, 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 and six months ended March 31, 2022 and 2021 (the "current quarter" and "prior-year quarter," respectively) are not necessarily indicative of the results of operations for the full fiscal year.

Principles of Consolidation

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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.

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

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

We continue to assess what type of impact various COVID-19 variants may 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 and cash flows.

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

Recently Adopted Accounting Policies

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 Financial Accounting Standards Board ("FASB") issued its 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.

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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 .

The impact of adoption on our condensed consolidated statements of operations for the three and six months ended March 31, 2022 was primarily to decrease interest expense by $ 3.4 million and $ 6.8 million, respectively.

This had the effect of increasing our basic earnings per share for the three and six months ended March 31, 2022 by $ 0.05 and $ 0.09 , and decreasing our diluted earnings per common share for the three and six months ended March 31, 2022 by $ 0.01 and $ 0.03 , respectively.

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.

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

Recently Issued Accounting Pronouncements

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.

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 Condensed Consolidated Financial Statements.

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

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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.

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.

Cash paid at closing was $ 11.6 million and an additional $ 3.8 million was paid during the fourth quarter of 2021.

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

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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.

During the second quarter of 2022, we obtained new information about the seller's calculation of pawn service charges receivable balance as of the date of acquisition, which resulted in a $ 0.6 million measurement period adjustment to reduce pawn service charges receivable and increase goodwill.

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

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

Three Months Ended December 31, 2021

Six Months Ended March 31, 2022

(in thousands) U.S.

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Effect of foreign currency translation changes — 1,134 1,134

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

Three Months Ended December 31, 2020

Balances as of March 31, 2022 $ 244,471 $ 41,743 $ 286,214

Six Months Ended March 31, 2021

(in thousands) U.S.

3 unchanged sentences

Effect of foreign currency translation changes — 617 617

Balances as of December 31, 2020

Balances as of March 31, 2021

$ 241,928 $ 16,271 $ 258,199

2 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per share amounts) 2022 2021 2022 2021

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* 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.

** See Note 8:

Debt 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.

During the three months and six months ended March 31, 2022, we increased net income by $ 1.8 million and $ 3.7 million respectively 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 .

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The information below provides a summary of our leasing activities.

See Note 12 in our 2021 Annual Report for additional information about our leasing activities.

Leases in our 2021 Annual Report for additional information about our leasing activities.

The table below presents balances of our operating leases:

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

(in thousands) March 31, 2022 March 31, 2021 September 30,

Right-of-use asset $ 204,343 $ 170,479 $ 200,990

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands) 2022 2021 2022 2021

2 unchanged sentences

Total lease expense $ 20,623 $ 16,680 $ 40,527 $ 34,058

* Includes sublease rental income.

* Includes a reduction for sublease rental income.

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.

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Other supplemental information includes the following for our operating leases:

Three Months Ended

Six Months Ended

Weighted-average remaining contractual lease term (years)

Weighted-average incremental borrowing rate 8.27 % 7.88 %

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

Maturities of lease liabilities as of March 31, 2022 were as follows (in thousands):

Remaining 2022 $ 34,749

5 unchanged sentences

Non-current portion $ 163,506

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.

We recorded $ 28.1 million and $ 6.6 million in non-cash additions to our right of use assets and lease liabilities for the six months ended March 31, 2022 and March 31, 2021, respectively.

STRATEGIC INVESTMENTS

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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.

On March 10, 2022, we purchased an additional 5.5 million shares of Cash Converters for $ 1.0 million.

This purchase increased our total ownership in Cash Converters to 242,239,157 shares, representing a 38.60 % ownership interest.

On April 5, 2022 (subsequent to the end of the quarter), we acquired an additional 13 million shares for $ 2.5 million, bringing our total ownership to 255,239,157 shares, representing an ownership interest of 40.67 %.

Additionally, on April 14, 2022, we received a cash dividend of $ 1.8 million from Cash Converters.

Subsequent Events.

The following tables present summary financial information for Cash Converters most recently reported results at December 31, 2021 after translation to U.S.

(in thousands) 2021 2020

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Total liabilities and shareholders’ equity $ 348,338 $ 360,222

Half-Year Ended June 30,

Half-Year Ended December 31,

(in thousands) 2021 2020

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Net profit (loss) 1 5,561

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

Fair Value Measurements 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.

In October 2021, we 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.

The investment in Founders is a variable interest entity, but because the Company is not the primary beneficiary, we do not consolidate it.

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.

Consequently, our 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.

Our maximum exposure for losses in this investment is its contributed investment of $ 15.0 million.

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

FAIR VALUE MEASUREMENTS

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Carrying Value Estimated Fair Value

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

March 31, 2022 March 31, 2022 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

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Carrying Value Estimated Fair Value

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

March 31, 2021 March 31, 2021 Fair Value Measurement Using

(in thousands) Level 1 Level 2 Level 3

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2025 Convertible Notes 136,836 143,175 — 143,175 —

8.5 % unsecured debt due 2024

816 816 — — 816

Carrying Value Estimated 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:

Included in “Accounts payable, accrued expenses and other current liabilities“ in our Consolidated Balance Sheets as of March 31, 2022 is $ 4.6 million which represents the fair value of acquisition-related contingent consideration as discussed in Note 2:

Acquisitions.

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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 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.

The fair value of the note approximated its carrying value as of March 31, 2022.

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

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.

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 use the equity method of accounting to account for our 13.14 % ownership in Rich Data Corporation ("RDC"), 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 approximated carrying value although such fair value is highly variable and includes significant unobservable 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 December 31, 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.

Organization And Summary Of Significant Accounting Policies for further discussion of this recently adopted accounting policy.

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

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

March 31, 2022 March 31, 2021 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

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2025 Convertible Notes 172,500 ( 2,580 ) 169,920 172,500 ( 35,664 ) 136,836 172,500 ( 31,857 ) 140,643

8.5 % unsecured debt due 2024*

— — — 816 — 816 — — —

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

Less current portion — — — 213 — 213 — — —

Total long-term debt $ 316,250 $ ( 4,082 ) $ 312,168 $ 316,250 $ ( 59,107 ) $ 257,143 $ 316,250 $ ( 52,064 ) $ 264,186

* 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:

The following table presents the Company's contractual maturities related to the debt instruments as of March 31, 2022:

Schedule of Contractual Maturities

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$ 316,250 $ — $ 143,750 $ 172,500 $ —

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

The following table presents the Company's interest expense related to the Convertible Notes for the three and six months ended March 31, 2022 and 2021:

Three Months Ended

Six Months Ended

(in thousands) 2022 2021 2022 2021

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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 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 effective interest rate for the three and six months months ended March 31, 2022 was approximately 3.35 %.

As of March 31, 2022, 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).

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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.

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2022.

As of March 31, 2022, 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 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 effective interest rate for the three and six months months ended March 31, 2022 was approximately 2.88 % for the 2025 Convertible Notes.

As of March 31, 2022, 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).

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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

Common Stock Repurchase Program

The stock trading price condition and other triggers are measured on a quarter-by-quarter basis and were not met as of March 31, 2022.

As of March 31, 2022, the if-converted value of the 2025 Convertible Notes did not exceed the principal amount.

COMMON STOCK AND STOCK COMPENSATION

Share Repurchase Program

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 .

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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.

On May 3, 2022, the Board approved a new share repurchase program, which will replace the previous program that was suspended in March 2020.

Subsequent Events.

Stock Compensation

11 unchanged sentences

Cancelled ( 711,844 ) 6.47

Outstanding as of December 31, 2021

Outstanding as of March 31, 2022

2,383,056 $ 6.30

1 unchanged sentence

CONTINGENCIES

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

Currently, and from time to time, we are involved in various claims, disputes, lawsuits, investigations, and legal and regulatory proceedings, including the matter described below.

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.

Because these matters are inherently unpredictable and unfavorable developments or resolutions can occur, assessing contingencies requires judgments and is highly subjective about future events, and the amount of resulting loss may differ from these estimates.

Except as noted below, 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.

On October 14, 2021, Andrew Kowlessar filed an action in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida styled Andrew Kowlessar, individually and on behalf of all others similarly situated vs.

d/b/a Value Pawn & Jewelry (Case No.

CACE-21-018864).

The matter subsequently was amended and removed to the United States District Court of the Southern District of Florida as Andrew Kowlessar, individually and on behalf of all others similarly situated vs.

EZPAWN Florida, Inc.

d/b/a Value Pawn & Jewelry (Case No.

0:21-cv-62362-RKA).

The amended complaint is brought under Section 501.059, Florida Statutes, the Florida Telephone Solicitation Act (“Act”), and alleges certain text messages were sent in violation of the Act.

The matter currently involves claims by a single individual, but alleges a class of persons who may have similar claims of violations of the Act and seeks class certification.

The parties are conducting discovery and are scheduled to conduct certain pre-trial mediation discussions.

We intend to defend vigorously against all claims, whether asserted individually or as a representative of any class.

We have not recorded a liability for this matter as of March 31, 2022.

An unfavorable resolution could have a material adverse effect on our results of operations for the period in which such resolution is recorded.

SEGMENT INFORMATION

4 unchanged sentences

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

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

• Other Investments — primarily our equity interest in the net results of Cash Converters and RDC 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 December 31, 2021

Three Months Ended March 31, 2022

(in thousands) U.S.

12 unchanged sentences

Depreciation and amortization 2,625 1,891 — 4,516 2,934 7,450

Gain on sale or disposal of assets and other — ( 9 ) — ( 9 ) ( 688 ) ( 697 )

Interest expense — — — — 2,527 2,527

Interest income — ( 255 ) — ( 255 ) — ( 255 )

Equity in net loss of unconsolidated affiliates — — 1,439 1,439 — 1,439

Other expense — 334 8 342 29 371

Segment contribution (loss) $ 33,812 $ 4,758 $ ( 1,418 ) $ 37,152

Income (loss) before income taxes $ 37,152 $ ( 17,029 ) $ 20,123

Three Months Ended March 31, 2021

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 93,827 $ 21,398 $ — $ 115,225 $ — $ 115,225

Jewelry scrapping sales 3,581 2,494 — 6,075 — 6,075

Pawn service charges 49,577 13,859 — 63,436 — 63,436

Other revenues 29 — 174 203 — 203

Total revenues 147,014 37,751 174 184,939 — 184,939

Merchandise cost of goods sold 51,812 13,978 — 65,790 — 65,790

Jewelry scrapping cost of goods sold 3,149 2,252 — 5,401 — 5,401

Net revenues 92,053 21,521 174 113,748 — 113,748

Segment and corporate expenses (income):

Store expenses 63,657 17,492 — 81,149 — 81,149

General and administrative — — — — 13,771 13,771

Depreciation and amortization 2,636 1,793 — 4,429 3,660 8,089

Loss on sale or disposal of assets and other — 101 — 101 11 112

2 unchanged sentences

Equity in net income of unconsolidated affiliates — — ( 1,250 ) ( 1,250 ) — ( 1,250 )

Other (income) expense — ( 134 ) ( 12 ) ( 146 ) 26 ( 120 )

Other expense — 85 9 94 51 145

Segment contribution $ 25,760 $ 2,621 $ 1,415 $ 29,796

Income (loss) before income taxes $ 29,796 $ ( 22,997 ) $ 6,799

Three Months Ended December 31, 2020

Six Months Ended March 31, 2022

(in thousands) U.S.

12 unchanged sentences

Depreciation and amortization 5,295 3,871 — 9,166 5,858 15,024

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

Gain on sale or disposal of assets and other — ( 4 ) — ( 4 ) ( 688 ) ( 692 )

Interest expense — — — — 4,958 4,958

Interest income — ( 437 ) — ( 437 ) ( 122 ) ( 559 )

Equity in net loss of unconsolidated affiliates — — 301 301 — 301

Other expense (income) — 200 ( 4 ) 196 55 251

Segment contribution (loss) $ 68,283 $ 11,245 $ ( 225 ) $ 79,303

Income (loss) before income taxes $ 79,303 $ ( 37,833 ) $ 41,470

Six Months Ended March 31, 2021

(in thousands) U.S.

Pawn Latin America Pawn Other Investments Total Segments Corporate Items Consolidated

Merchandise sales $ 176,080 $ 46,928 $ — $ 223,008 $ — $ 223,008

Jewelry scrapping sales 7,585 5,249 — 12,834 — 12,834

Pawn service charges 99,797 27,128 — 126,925 — 126,925

Other revenues 51 7 249 307 — 307

Total revenues 283,513 79,312 249 363,074 — 363,074

Merchandise cost of goods sold 99,871 30,462 — 130,333 — 130,333

Jewelry scrapping cost of goods sold 5,993 4,610 — 10,603 — 10,603

Other cost of revenues — — — — —

Net revenues 177,649 44,240 249 222,138 — 222,138

Segment and corporate expenses (income):

Store expenses 125,749 34,709 — 160,458 — 160,458

General and administrative — — — — 26,281 26,281

Depreciation and amortization 5,372 3,653 — 9,025 6,636 15,661

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

Interest expense — — — — 10,973 10,973

Interest income — ( 1,335 ) — ( 1,335 ) ( 71 ) ( 1,406 )

Equity in net income of unconsolidated affiliates — — ( 1,766 ) ( 1,766 ) — ( 1,766 )

2 unchanged sentences

Income (loss) before income taxes $ 56,300 $ ( 43,999 ) $ 12,301

The following table presents separately identified net earning assets by segment:

(in thousands) U.S.

Pawn Latin America Pawn Other

Investments Corporate Items Total

As of March 31, 2022

Pawn loans $ 133,515 $ 40,103 $ — $ — $ 173,618

Inventory, net 93,320 26,570 — — 119,890

As of March 31, 2021

Pawn loans $ 95,369 $ 29,899 $ — $ — 125,268

Inventory, net 69,782 16,432 — — 86,214

SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

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

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

(in thousands) March 31, 2022 March 31, 2021 September 30,

Gross pawn service charges receivable $ 35,886 $ 26,607 $ 37,360

19 unchanged sentences

Accounts payable, accrued expenses and other current liabilities $ 69,695 $ 69,019 $ 90,268

SUBSEQUENT EVENTS

Share Repurchase Program

On May 3, 2022, the Board of Directors approved a new share repurchase program, which will replace the previous program that was suspended in March 2020 at the onset of the COVID-19 pandemic.

Share-Based Compensation — Common Stock Repurchase Program.

Under the new program, the Company is authorized to repurchase up to $ 50 million of our Class A Non-Voting common shares over the next three years .

Execution of the program will be responsive to fluctuating market conditions and valuations, liquidity needs and the expected return on investment compared to other opportunities.

The amount and timing of purchases will be dependent on a variety of factors, including stock price, trading volume, general market conditions, legal and regulatory requirements, general business conditions, the level of cash flows, and corporate considerations determined

by management and the Board, such as liquidity and capital needs and the availability of attractive alternative investment opportunities.

The Board of Directors has reserved the right to modify, suspend or terminate the program at any time.

Purchase Additional Shares of Cash Converters

On April 5, 2022, we purchased an additional 13 million shares of Cash Converters for $ 2.5 million.

This purchase increased our total ownership in Cash Converters to 255,239,157 shares, representing an ownership interest of 40.67 %.

Additionally, in April 2022, we received a cash dividend of $ 1.8 million from Cash Converters.

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