UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ------------------
                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED JUNE 30, 2000

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                     FOR THE TRANSITION PERIOD FROM ___TO___

                         COMMISSION FILE NUMBER 0-20774

                             ACE CASH EXPRESS, INC.
             (Exact name of registrant as specified in its charter)

         TEXAS                                             75-2142963
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


1231 GREENWAY DRIVE, SUITE 800
IRVING, TEXAS                                                           75038
(Address of principal executive offices)                             (Zip Code)

       (Registrant's telephone number, including area code) (972) 550-5000

           Securities registered pursuant to Section 12(b) of the Act:
                                                     NAME OF EACH EXCHANGE
TITLE OF EACH CLASS                                  ON WHICH REGISTERED
                                      NONE
           Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, $.01 PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes   X          No
   ------      ------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of September 14, 2000, 9,955,763 shares of Common Stock were outstanding.  As
of such date the  aggregate  market  value of voting  stock (based upon the last
reported  sales price in The Nasdaq Stock Market) held by  nonaffiliates  of the
registrant was approximately $78,041,908.

                       DOCUMENTS INCORPORATED BY REFERENCE
The  information  required by Part III is  incorporated  by  reference  from the
registrant's  definitive  proxy  statement to be filed with the  Securities  and
Exchange Commission pursuant to Regulation 14A not later than 120 days after the
end of the fiscal year covered by this report.


<PAGE>


                                     PART I
ITEM 1. BUSINESS

GENERAL

Ace Cash Express,  Inc.  ("ACE" or the  "Company") is a significant  provider of
retail financial  services in the United States. The Company is also the largest
owner, operator, and franchisers,  of check cashing stores in the United States.
As of August 31,  2000,  the Company had a total  network of 1,084  stores in 33
states and the District of Columbia,  consisting of 921 Company-owned stores and
163  franchised   stores.   The  Company's   growth  strategy  is  to  integrate
acquisitions,  new store openings,  and franchising in new and existing  markets
and to develop new products for  introduction  into the existing store base. The
Company's  general  objective  is to  provide a full  range of retail  financial
services and  transaction  processing  in its markets.  Additionally,  it is the
Company's  objective to develop and  maintain  the largest  network of stores in
markets where the Company operates.

   ACE stores offer check cashing services and other retail  financial  services
at competitive  rates in clean,  convenient  settings.  Services include cashing
payroll checks,  government checks, and insurance drafts;  selling money orders;
and  providing  money  transfer  services  using  the  MoneyGram  network.  Many
Company-owned  stores  also  offer  bill-payment  services,  lottery  and  lotto
tickets,  small  consumer  loans,  and other retail  financial  and  transaction
processing services.

INDUSTRY OVERVIEW

   The primary industry in which ACE operates is check cashing. Industry sources
indicate that there are  approximately  6,000 check cashing  stores  nationally.
Though there is limited public information available,  the Company believes that
there are six other check cashing  companies  operating or franchising  over 100
stores,  three companies that operate or franchise between 50 and 100 locations,
with the remaining companies operating less than 50 stores.

   The Company believes that it and other check cashing  companies have grown by
offering  services  that banks do not provide,  and  operating at locations  and
during hours that are more convenient than those traditionally offered by banks.
Unlike  many  banks,  check  cashing  stores are willing to assume the risk that
checks they cash will  "bounce." For  instance,  it is not unusual for a bank to
refuse to cash a check for a customer  who does not  maintain a deposit  account
with the bank and to require its depositors to maintain  sufficient  funds in an
account  to cover a check to be  cashed  or wait  several  days for the check to
clear.  As a result,  the  Company  believes  check  cashing  stores  provide an
attractive  alternative  to customers  without bank accounts or with  relatively
small account balances.  Although these customers might save money by depositing
their checks in a bank and waiting for them to clear,  many prefer  paying a fee
to take advantage of the convenience and  availability of immediate cash offered
by check cashing stores.

   The core business of check cashing  stores is generally  cashing checks for a
fee.  These fees are  intended to provide the check  casher with a profit  after
covering  operating  expenses,  including any interest  expense  incurred by the
check  casher on the funds  advanced  to  customers  between the time checks are
cashed and the time the checks  clear  through  the banking  system.  The risk a
check  cashing  store  assumes  upon  cashing a check is that the check  will be
uncollected  because of insufficient  funds,  stop payment orders,  or fraud. In
order to minimize this risk and the losses  associated with uncollected  checks,
many check cashing  stores cash only payroll or government  entitlement  checks,
charge higher fees, or have stricter  approval  procedures for cashing  personal
checks.  ACE does not promote the cashing of personal checks in its stores.  For
the fiscal year ended June 30,  2000,  less than 1% of the checks  cashed by the
Company were one-party personal checks.

   In  addition to check  cashing  services,  most check  cashing  stores  offer
customers a range of other services,  including  access to small consumer loans,
bill  payments,  money orders,  and wire  transfers of cash.  Some check cashing
stores  also offer  lottery and lotto  tickets,  public  transportation  passes,
copying and fax transmission services, and postage stamps.

<PAGE>
   The Company  believes  that the  deregulation  of the banking and savings and
loan industry has increased the role played by check cashing stores in providing
basic financial transaction services to low-income and middle-income  customers.
At the same time, the Company believes that competition, regulatory scrutiny and
complexity are  contributing  to  consolidation  of the industry.  The Company's
strategy is to position  itself to benefit from industry  consolidation  and the
competitive  advantages  available to large  operators and franchisors of retail
financial services.

GROWTH STRATEGY

   ACE's growth strategy consists principally of combining  acquisitions and new
store  openings  with the  objective  of  having  the  largest  number of retail
financial  services locations in each of its markets and developing new products
for introduction into the existing store base. ACE defines its target markets as
cities of 100,000 or more.  The  Company  has  expanded  from 276  Company-owned
stores in 10 metropolitan areas as of June 30, 1993, to 915 Company-owned stores
in 272 cities as of June 30, 2000. In fiscal 2000,  the Company  opened 99 newly
constructed  stores,  acquired 36 stores,  franchised  56 stores,  and closed 18
company-owned  stores. The Company currently  anticipates that it will construct
and open 50 stores, primarily in existing markets, during the fiscal year ending
June 30, 2001.


<PAGE>


    The following  table  illustrates the  development of  Company-owned  stores
   since 1994 by showing  the number of stores  open in each  market area at the
   end of each of the indicated periods:

<TABLE>

<CAPTION>
                                                            COMPANY-OWNED STORES
                                          -------------------------------------------------------
                                                                June 30,
                                          -------------------------------------------------------
MARKET AREA                               2000     1999   1998    1997    1996    1995     1994
                                          ----     ----   ----    ----    ----    ----     ----

<S>                                        <C>     <C>     <C>      <C>     <C>     <C>     <C>
TEXAS:
Dallas/Fort Worth/East Texas               129     122     117     114     112     103      98
Houston/Galveston/Corpus Christi           112      83      76      74      72      60      55
San Antonio/Austin/El Paso                  68      59      51      42      28      24      23
MARYLAND/WASHINGTON D.C./VIRGINIA:
Baltimore/Washington D.C./
Northern VA/Norfolk/Virginia Beach          93      81      77      72      74      71      62
FLORIDA:
Jacksonville/Orlando/Palm Beach/Tampa       90      73      60      46      38       -       -
ARIZONA;
Phoenix/Tuscon                              73      69      59      58      46      37       4
GEORGIA:
Atlanta/Albany/Augusta/Macon/
Savannah                                    54      52      50      47      47      49      42
COLORADO:
Denver/Colorado Springs/Pueblo              52      51      45      44      41      39      30
NORTH & SOUTH CAROLINA
Charlotte/Charleston/Columbia/
Greenville/Spartanburg/Orangeburg           34      29      17      16      16      15      11
CALIFORNIA:
Los Angeles/Van Nuys/San Bernadino          30      16       9       -       -       -       -
TENNESSE:
Memphis/Nashville                           26      22      18      15       5       2       -
LOUISIANA:
New Orleans/Baton Rouge/Shreveport          25      25      25      25      19      19      14
INDIANA:
Indianapolis                                25      23      14       9       4       -       -
WASHINGTON:
Seattle/Tacoma/Everette                     14      12      10       8       6       -       -
NEVADA:
Las Vegas                                   14      11       4       -       -       -       -
OKLAHOMA:
Oklahoma City                               12      14      13      13      12      12       -
OHIO:
Cleveland                                   11      10      10      10       8       7       4
MISSOURI:
St. Louis                                   11      10       6       6       3       3       -
OREGON:
Portland                                     9       8       5       5       -       -       -
NEW MEXICO:
Albuquerque                                  8       8       7       7       7       7       -
ARKANSAS:
Little Rock                                  8       7       7       6       6       4       -
UTAH:
Salt Lake City/Layton/Ogden                  5       3       -       -       -       -       -
KANSAS:
Wichita                                      4       3       2       -       -       -       -
ALABAMA:
Birmingham/Homewood                          3       4       1       -       -       -       -
PENNSYLVANIA:
Pittsburg                                    3       -       -       -       -       -       -
KENTUCKY:
Paducah /Murray                              2       3       -       -       -       -       -
                                           ---     ---     ---     ---     ---     ---     ---
TOTAL                                      915     798     683     617     544     452     343
                                           ===     ===     ===     ===     ===     ===     ===

</TABLE>
<PAGE>



    Acquisitions.  During fiscal 2000,  the Company  acquired 36 stores in eight
separate  transactions.  The Company  believes its experience with  acquisitions
permits it to successfully  integrate  additional  acquisitions.  Of the 915 ACE
company-owned  stores  currently in  operation,  325, or 36%, have been acquired
stores.  The Company  does not have any current  plan or  expectation  as to the
number of stores  that it may  acquire  during the fiscal  year  ending June 30,
2001. The Company intends to continue  searching for strategic  opportunities in
both existing and new markets.

FRANCHISE OPERATIONS

   With the acquisition of Check Express,  Inc. and its wholly owned franchising
subsidiaries in February 1996, the Company became one of the largest franchisors
of check cashing  stores in the United  States.  In fiscal 1996, ACE created the
ACE Franchise Group to service and market new ACE franchises. ACE franchises are
marketed   through  a  commissioned   employee  sales  force,   supplemented  by
advertising in newspapers, trade journals, and other media. As of June 30, 2000,
there were 157  Company-franchised  stores open and  operating in 27 states,  as
follows:


                                              Number of stores
                                              ----------------

                         Texas                      48
                         California                 15
                         Louisiana                  13
                         Florida                    12
                         Oklahoma                   11
                         Ohio                        9
                         South Carolina              7
                         Georgia                     6
                         North Carolina              5
                         Colorado                    3
                         Missouri                    3
                         Oregon                      3
                         Arizona                     2
                         Arkansas                    2
                         Connecticut                 2
                         Indiana                     2
                         Kentucky                    2
                         Tennessee                   2
                         Washington                  2
                         Other states (8)            8
                                                   ---
                         Total                     157
                                                   ===



   The  Company  intends  to  continue  its  expansion  through  the sale of new
franchises  and  the  opening  of  additional  units  under  existing  franchise
agreements.  The Company is actively  marketing  several types of ACE franchises
depending on the style of business  being  conducted.  These  include a standard
store franchise, a store-within-a-store (or "kiosk") franchise, and a conversion
franchise that permits an existing  check cashing  business to convert to an ACE
franchisee.  The Company  opened 56 new franchised  stores,  sold six franchised
stores,  closed six  franchised  stores,  and acquired  seven former  franchised
stores during fiscal 2000.  The majority of franchised  stores operate under the
"ACE" name, by license from the Company.

CUSTOMERS AND SERVICES

   Management  believes the Company's core customer group is composed  primarily
of individuals whose average age is 29 and who rent their house or apartment and
hold a wide  variety  of jobs in the  service  sector or are  clerical  workers,
craftsmen, and laborers. These customers tend to change jobs and residences more
often than average,  have annual family incomes under  $30,000,  often pay their
bills with money orders,  and prefer the availability of immediate cash provided
by cashing checks at the Company's stores.
<PAGE>

   The  following  table  reflects  the major  categories  of services  that ACE
currently  offers and the revenues (in  thousands)  from these  services for the
indicated fiscal years:
<TABLE>
<CAPTION>

                                                   YEAR ENDED JUNE 30,
--------------------------   --------------------------------------------------------
REVENUE CATEGORY                2000        1999       1998        1997         1996
--------------------------   --------     --------   --------    --------    --------
  <S>                        <C>         <C>         <C>         <C>         <C>
  Check cashing fees         $ 89,641    $ 78,839    $ 68,987    $ 62,835    $ 51,327
  Loan fees and interest       17,872      14,257      10,137       5,703       2,462
  Bill payment services         9,447       8,394       4,146       2,197       1,320
  Money transfer services       8,944       7,951       6,082       5,749       4,740
  Money order fees              7,032       5,332       2,879       2,757       2,413
  New customer fees             2,164       2,296       2,207       2,051       1,338
  Franchise revenues            2,537       2,117       1,665       1,398         633
  Other fees                    2,999       3,128       4,091       4,702       4,726
                             --------    --------    --------    --------    --------
  Total revenue              $140,636    $122,314    $100,194    $ 87,392    $ 68,959
                             ========    ========    ========    ========    ========

</TABLE>

   Check  cashing.  ACE's  primary  business  is cashing  checks for a fee.  The
principal type of check the Company cashes is a payroll check.  The Company also
cashes  government  assistance,  tax  refund,  and  insurance  checks or drafts.
Subject to market conditions at different locations, the Company's check cashing
fees for payroll checks  approximate  2.2% of the face amount of the check.  The
Company imposes a surcharge for cashing out-of-state checks, handwritten checks,
money orders, tax refund checks, and insurance checks or drafts.  Unlike many of
its competitors, the Company displays its check cashing fees in full view of its
customers on a "menu  board" in each store and  provides a detailed  receipt for
each transaction.  Although the Company has established guidelines for approving
check cashing transactions,  it has no preset limit on the size of the checks it
will cash.

   If a check  cashed by the  Company is not paid for any  reason,  the  Company
accounts  for the  amount  of the  check as a loss in the  period in which it is
returned.  ACE then  transfers  the check to its  collection  department,  which
contacts the maker and payee of each returned check and, if necessary, commences
legal action. The collection department utilizes an automated tracking system on
the  Company's  central  computer  system to monitor the status of all  returned
items. See "Selected Financial Data -- Collections Data."

   Loan  services.  The Company is engaged in the small  consumer loan business,
because the Company  believes  that many  consumers  may have limited  access to
other  sources of  consumer  credit.  During the year ended June 30,  2000,  the
Company offered payday loans at various of its locations, and offered short-term
bank loans made by Goleta  National Bank at certain of its  locations.  See " --
Bank Loans" below.

   Where permitted by law, the Company has offered a service  commonly  referred
to in the  check-cashing  industry as a "payday loan." That service  consists of
providing a customer cash in exchange for the customer's check (in the amount of
that cash plus a service  fee),  with an agreement to defer the  presentment  or
deposit of that check until the customer's next payday,  usually a period of two
to four  weeks.  ACE has  been a  licensed  provider  of such  payday  loans  in
Arkansas,  California,  Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana,
Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Ohio, Oregon, Tennessee,
Washington, and Washington D.C. During the year ended June 30, 2000, the average
amount of cash  provided to a customer in such a transaction  was  approximately
$220, and the fee received by the Company was  approximately  $31.07. As of June
30, 2000,  this service was offered in 45 of the Company's  stores.  The Company
has now ceased to offer this service at almost all of its stores.

   The  payday  loan  service  has been  subject  to  extensive  regulation.  As
required,  each ACE store that has offered  payday loans has been licensed under
state laws,  which establish  allowable fees and other charges on these loans to
consumers.  In addition, many states regulate the maximum amounts and maturities
of these loans.

   Certain  jurisdictions  in which the Company  operates  do not permit  payday
lending;  one of those  states is Texas,  the state in which the Company has the
most locations.  Further,  the regulations in the various states in which payday
lending is permitted  are not  uniform.  Because the Company  believes  that its
business would benefit by making a single or standard loan product  available to
its customers in all  jurisdictions,  it is now offering  short-term  loans from
Goleta National Bank at almost all of the ACE locations.
<PAGE>

   Bill-payment  services.  The Company's stores serve as payment  locations for
customers to pay their  utility,  telephone,  and other bills to third  parties.
Upon acceptance of the customer's payment, the Company remits the amount owed to
the  third-party  payee under an agreement with that payee and either receives a
service fee from the payee or collects a fee from the consumer.

   Under a Bill-Payment  Processing and Funds Transfer  Services  Agreement (the
"MoneyLine   Agreement")  with  Travelers  Express  Company,   Inc.  ("Travelers
Express") and its affiliate MoneyLine Express, Inc.  ("MoneyLine"),  the Company
acts as an agent for MoneyLine,  which has agreements  with various  third-party
payees for consumer  services.  The Company's services and obligations under the
MoneyLine  Agreement are similar to those in its other  bill-payment  agreements
directly with the payees,  though consumer  payments accepted by the Company are
transmitted  to  MoneyLine  instead of  directly to the  payees.  The  MoneyLine
Agreement  permits the Company to offer its customers  bill-payment  services to
virtually any third-party payee.

  Money transfer  services.  ACE is an agent for the transmission and receipt of
wire  transfers  through  the  MoneyGram  network.  Through  this  network,  ACE
customers  can transfer  funds  electronically  to any of  approximately  15,000
MoneyGram  locations  nationwide  (including  other ACE  stores) and over 30,000
locations  worldwide.  MoneyGram Payment Systems,  Inc. establishes the fees for
this service,  and the Company is paid a percentage of the fees it collects from
customers as a commission and remits the balance to MoneyGram  Payment  Systems,
Inc.

  Money orders.  The Company  sells money orders issued by Travelers  Express in
denominations  up to  $1,000.  These  money  orders  are  generally  used by the
Company's  customers  for  bill  payments,  rent  payments,  and  other  general
disbursements.  The Company sold 12.3 million,  14.5  million,  and 14.1 million
money orders during the 2000,  1999,  and 1998 fiscal years,  respectively.  The
fees charged for money orders depend on local market  conditions and the size of
the money order.  The Company remits the face amount of each money order sold to
Travelers  Express.  ACE's money order revenues include that portion of the fees
retained by the Company.

   New customer fees.  The Company  charges a one-time fee for new check cashing
customers to cover the costs of initial set-up in the ACE customer  database and
establishment of an identification verification system.

   Franchise  revenues.  The Company's  franchise revenues consist of royalties,
initial  franchise fees, and buyback fees from its  franchisees.  There were 157
Company-franchised stores in operation as of June 30, 2000.

   Other services and products.  In many Company-owned stores, ACE also offers a
variety of other  retail  financial  products  and  services  to its  customers,
including lottery and lotto ticket sales, public transportation  passes, copying
and  fax  transmission  services,  postage  stamps,  and  prepaid  long-distance
telephone cards.

STORE OPERATIONS AND NEW STORE ECONOMICS

   The  Company's  objective  is to locate  its  Company-owned  stores in highly
visible, accessible locations and to operate the stores during convenient hours.
The Company attempts to locate stores on high traffic streets or  intersections,
in many cases in or near  destination  shopping  centers.  The Company's  stores
occupy 1,100 square feet on average and are located in strip  shopping  centers,
free-standing  buildings,  and kiosks located  inside major retail  stores.  The
Company  is  focused  on  increasing  the  market's  awareness  of ACE by  using
consistent  signage  and  design  at  each  store  location.  All but two of the
Company-owned stores are leased.

   Normal business hours of the Company-owned  stores are from 9:00 a.m. until
7:00 p.m.,  Monday through  Thursday,  9:00 a.m. until 8:00 p.m. on Friday,  and
9:00 a.m.  until 6:00 p.m. on Saturday.  Currently,  160 stores are also open on
Sunday,  generally  from 10:00 a.m. until 5:00 p.m., and several stores are open
24 hours.  The  business  hours of any store may be changed due to local  market
conditions.
<PAGE>

   The Company's store  construction  and facilities  planning staff reviews and
negotiates lease agreements for store locations,  supervises the construction of
new stores,  the remodeling of existing  stores,  and performs lease  management
once the leases are  executed.  Although  the size and shape of a  Company-owned
store may vary,  and since many of the stores are built out of  existing  space,
the work area of each store is a modular-designed unit that can be customized to
meet the requirements of each location while giving a uniform appearance.  These
modular  units may be moved from one  location to the next,  thus  reducing  the
costs associated with opening new stores and relocating existing stores.

   The tables below show the average annual store revenues and the average store
contribution  for  Company-owned  stores which were opened and remain open as of
June 30, 2000.

<TABLE>
<CAPTION>

                                                             AVERAGE STORE REVENUES
                                                                YEAR ENDED JUNE 30,
                        NUMBER OF                                  (IN THOUSANDS)
                      STORES OPEN AT      ------------------------------------------------------------
YEAR OPENED:          JUNE 30, 2000         2000         1999         1998         1997        1996
                     -----------------    ---------    ---------    ---------    ---------    --------
<S>                        <C>              <C>          <C>          <C>          <C>         <C>
1991 and earlier           145              $198.1       $185.1       $167.2       $158.6      $151.7
1992                        22               232.0        228.0        202.0        177.4       154.2
1993                        37               200.6        186.9        159.8        143.1       127.8
1994                        35               177.3        168.2        148.8        134.0       114.4
1995                        34               164.9        156.7        126.5        113.2        85.8
1996                        29               184.2        164.8        141.1        107.6        33.8
1997                        40               152.6        138.4        103.0         32.3           -
1998                        59               124.0         93.0         25.6            -           -
1999                        90                82.4         28.6            -            -           -
2000                        99                22.8            -            -            -           -
                     -----------------
                           590
Acquired stores            325
                     -----------------
                           915
                     =================

</TABLE>
<TABLE>
<CAPTION>

                                                           AVERAGE STORE CONTRIBUTION (1)
                                                                  YEAR ENDED JUNE 30,
                         NUMBER OF                                   (IN THOUSANDS)
                       STORES OPEN AT     ------------------------------------------------------------
YEAR OPENED:           JUNE 30, 2000         2000         1999         1998         1997        1996
                     -----------------    ---------    ---------    ---------    ---------    --------
<S>                        <C>              <C>          <C>           <C>          <C>         <C>
1991 and earlier           145              $ 86.5       $ 76.9        $64.7        $58.9       $54.6
1992                        22               112.7        109.3         88.8         69.8        52.7
1993                        37                81.3         76.0         58.4         47.6        35.9
1994                        35                68.1         58.6         45.3         43.3        26.8
1995                        34                52.3         44.4         23.4         18.5       (1.4)
1996                        29                71.4         51.9         36.1          8.6       (7.9)
1997                        40                34.4         26.6        (1.5)       (12.4)           -
1998                        59                19.8          6.2       (13.9)            -           -
1999                        90              (19.2)       (19.5)            -            -           -
2000                        99              (16.5)            -            -            -           -
                     -----------------
                           590
Acquired stores            325
                     -----------------
                           915
                     =================
</TABLE>

-----------------------------------------------------

(1)     "Average store contribution"  equals revenues less direct store expenses
        and store-related  depreciation and amortization.  Direct store expenses
        consist  of  store  salaries  and  benefits,   occupancy   costs  (rent,
        maintenance,  taxes and utilities),  returned checks net of collections,
        cash shortages,  armored  security costs,  loan losses,and bank charges.
        Direct   store   expenses   exclude   region  or   corporate   overhead,
        depreciation, and amortization expenses.

   The capital cost of opening a new store varies depending on the size and type
of store.  During fiscal 2000, the Company opened 99 Company-owned  stores at an
average capital cost of approximately $61,000 per store.

<PAGE>

   There can be no assurance that the Company's stores will continue to generate
the same level of revenues  or revenue  growth as in the past or that any new or
acquired  store  will  perform  at a level  comparable  to any of the  Company's
existing stores.

ADVERTISING AND MARKETING

   ACE  markets and  promotes  service  and  product  offerings  by a variety of
methods.  The Company  believes  that its most  effective  marketing  is through
in-store programs, combining the selling efforts of store personnel with various
selling messages on point-of-purchase material. The Company emphasizes courteous
service  and  trains   service   associates   to  recognize   and  develop  good
relationships with customers. All check cashing customers join the ACE PLUS gold
card  retention  program,  which  rewards  members with benefits like free check
cashing commensurate with the volume of check cashing done at ACE. Also, through
its branding with standardized signage and store design, the Company attempts to
foster an image that attracts  customers and inspires consumer  confidence.  The
Company also benefits from vendor-sponsored media advertising in some markets.

SUPERVISION AND TRAINING

   The  Company's   operations  are  organized  in  "regions,"  which  generally
correspond to the market areas in which ACE operates its stores. Each region has
a regional vice president  ("RVP"),  who reports to the Executive Vice President
of Operations and is responsible for the operations,  administration,  training,
and supervision of the  Company-owned  stores in his or her region.  The Company
currently has 11 RVP's who  supervise an average of 83 stores each.  The Company
currently has 56 district  supervisors,  each of whom reports to the RVP for his
or her region and is directly  responsible for the general management of 6 to 30
stores within his or her territory.  These district  supervisors are responsible
for operations,  training,  scheduling,  marketing,  and staff motivation.  Each
store manager reports to a district supervisor,  has direct  responsibility over
his or her store's  operations,  and supervises the service associates who staff
the stores.

   Service associates,  managers, district supervisors,  and RVP's must complete
formal  training  programs  conducted  by the  Company.  ACE has a  Company-wide
training program,  with higher-level  training conducted at the corporate office
and new-hire  training  conducted in each regional  office by  corporate-trained
personnel.  The purpose of this  training,  which  covers  topics  ranging  from
customer  service to loss  reduction,  is to improve the  Company's  delivery of
products and services.

POINT-OF-SALE SYSTEM

   ACE has developed  and  implemented a  proprietary  personal  computer  based
point-of-sale  system,  which has been fully  operational  in all  Company-owned
stores  since  1991.  In addition to other  management  information  and control
functions, ACE's point-of-sale system allows the Company to:

1) capture,  analyze, and update on a daily basis data relating to customers and
transactions, including the makers of cashed checks, which allows the Company to
provide service associates with on-demand access to current  information for use
in  approving  check  cashing  transactions;
2) utilize an  automated  decision
methodology  to guide  service  associates  to take  appropriate  actions and to
better manage risk in check cashing transactions;
3)monitor daily revenues by product or service on a company,  regional, per
store, and per employee basis;
4) monitor and manage daily store exception reports,  which record, for example,
any cash  shortages and late store opening times;
5) identify cash  differences between bank statements and the Company's records
(such as differences resulting from missing items and deposits);
6) determine,  on a daily  basis,  the  amount of cash  needed  at each  store
location, allowing centralized cash management personnel to maintain the optimum
amount of cash inventory in each store;
7) reduce  the  risk of  transaction  errors  by,  for  example,  automatically
calculating  check cashing and other  transaction  fees;
8) provide products and services in a standardized and efficient manner,  which
the Company  believes allows it to operate its stores with fewer personnel than
many of its competitors  (with many of the Company's stores being operated by
only one person);

<PAGE>

9) electronically transmit information and documents to third-party providers of
services or products offered at the stores; and
10)facilitate compliance with regulatory requirements.

  The data captured by the  point-of-sale  system is transmitted daily from each
store  to a  centralized  database  maintained  at  ACE's  headquarters  and  is
automatically integrated into its general ledger system.

SECURITY

   All Company-owned store employees work behind bullet-resistant  Plexiglas and
steel partitions.  Each  Company-owned  store's security measures include safes,
alarm systems monitored by third parties,  teller area entry control,  perimeter
opening  entry  detection,  and tracking of all employee  movement in and out of
secured areas. All centers are currently using  centralized  security;  acquired
centers are typically converted within one month of acquisition. The centralized
system includes the following  security  measures in addition to those described
above: identical alarm systems in all stores, remote control over alarm systems,
arming/disarming  and changing user codes, and  mechanically and  electronically
controlled time-delay safes.

   Since ACE's business requires its stores to maintain a significant  supply of
cash, the Company is subject to the risk of cash shortages  resulting from theft
and employee  errors.  Although the Company has implemented  various programs to
reduce these risks and provide security for its facilities and employees,  there
can be no assurance that these problems will be eliminated.  During the 2000 and
1999 fiscal  years,  cash  shortages  from  employee  errors and from theft were
approximately  $2.8  million  (2.0%  of  revenues)  and  $2.5  million  (2.0% of
revenues), respectively.

   The Company's point-of-sale system allows management to detect cash shortages
on a daily basis. In addition to other procedures,  district supervisors conduct
random audits of each Company-owned  store's cash position and inventories on an
unannounced, random basis.

   Daily  transportation  of  currency  and  checks is  provided  by  nationally
recognized armored carriers,  such as Loomis, Fargo & Company. ACE employees are
not authorized to transport currency or checks.

EMPLOYEES

    At June 30, 2000,  ACE employed 2,046 persons:  1,092 store  employees,  677
store  managers,  56 district  supervisors,  11 regional  vice  presidents,  117
regional support personnel, 81 corporate employees,  and 12 franchise personnel.
Third-party  firms  hired  by  the  Company  conduct  background  checks  of the
Company's new hires.

   The Company considers its employee  relations to be good. ACE's employees are
not  covered by a  collective  bargaining  agreement,  and the Company has never
experienced any organized work stoppage,  strike,  or labor dispute.  Generally,
the Company's employees are not bonded.

COMPETITION

   The Company  believes  that the  principal  competitive  factors in the check
cashing industry are location, customer service, fees, convenience, and range of
services  offered.  The Company faces intense  competition and believes that the
check cashing market is becoming more  competitive  as the industry  matures and
consolidates.  The Company  competes  with other check cashing  stores,  grocery
stores, banks, savings and loans,  short-term consumer lenders,  other financial
services  entities,  and any  retail  businesses  that cash  checks,  sell money
orders,  provide money transfer services,  or other similar financial  services.
Certain competitors of the Company, other than check cashing stores, cash checks
without  charging  a fee  under  limited  circumstances.  Some of the  Company's
competitors  that  are  not  check  cashing   companies  have  larger  and  more
established customer bases and substantially greater financial,  marketing,  and
other resources.  There is no assurance that the Company will be able to compete
successfully with its competitors.
<PAGE>

TRADEMARKS

   The Company has obtained several federal trademark  registrations,  including
for "A-C-E America's Cash Express(R)", "ACE(R)" and its logo design.

REGULATION

   General.  The Company is subject to  regulation in several  jurisdictions  in
which it operates,  including  jurisdictions that regulate check cashing fees or
require  the  registration  of check  cashing  companies  or money  transmission
agents. The Company is also subject to federal and state regulation  relating to
the reporting  and  recording of certain  currency  transactions.  Further,  the
Company has been  subject to  regulation  in the  jurisdictions  in which it has
offered the service commonly referred as a "payday loan."

   State  Regulations.  The Company  operates  in 18 states that have  licensing
and/or fee regulations regarding check cashing: Arkansas,  Arizona,  California,
Florida,  Georgia,  Indiana,  Kentucky,   Louisiana,   Maryland,  Nevada,  North
Carolina, Ohio, Pennsylvania,  South Carolina,  Tennessee, Utah, Washington, and
the District of Columbia. The Company is licensed in each of the states in which
a license is currently required for it to operate as a check cashing company. To
the extent these  states have  adopted  ceilings on  check-cashing  fees,  those
ceilings are in excess or equal to the fees charged by the Company.

   The adoption of check cashing fee ceilings in additional  jurisdictions could
have an adverse  effect on the  Company's  business,  and  existing fee ceilings
could restrict the ability of the Company to expand its check-cashing operations
into certain states.

   In some  jurisdictions,  check cashing companies or money transmission agents
are required to meet minimum bonding or capital  requirements and are subject to
record-keeping  requirements.  In addition,  in those jurisdictions in which the
Company has operated as a "payday  lender," it has been licensed as such and has
had to  comply  with the  regulations  governing  payday  loans.  Those  various
licenses,  and compliance with those various  regulations,  may not be necessary
for the offering of the Bank Loans at the  Company's  locations.  The Bank Loans
are subject  primarily to federal  regulation  applicable to Goleta as a lending
national bank.

   Federal  Regulations.  Under the Bank  Secrecy  Act  regulations  of the U.S.
Department of the Treasury (the "Treasury  Department"),  transactions involving
currency  in an  amount  greater  than  $10,000  or  the  purchase  of  monetary
instruments  for cash in amounts  from $3,000 to $10,000  must be  reported.  In
general,  every financial  institution,  including the Company, must report each
deposit, withdrawal,  exchange of currency or other payment or transfer, whether
by, through or to the financial institution, that involves currency in an amount
greater  than  $10,000.  In addition,  multiple  currency  transactions  must be
treated as single  transactions if the financial  institution has knowledge that
the  transactions  are by, or on behalf of, any person and result in either cash
in or  cash  out  totaling  more  than  $10,000  during  any one  business  day.
Management    believes   that   the   Company's    point-of-sale    system   and
employee-training  programs are essential to the Company in complying with these
statutory requirements.

   The Money  Laundering  Suppression  Act of 1994  added a section  to the Bank
Secrecy Act requiring the registration of "money services  businesses," like the
Company, that engage in check cashing, currency exchange, money transmission, or
the issuance or  redemption  of money  orders,  traveler's  checks,  and similar
instruments.   The  purpose  of  the  registration  is  to  enable  governmental
authorities  to better  enforce  laws  prohibiting  money  laundering  and other
illegal  activities.  The  registration  requirement  was suspended  pending the
adoption of regulations  implementing the statute, and in May 1997 the Financial
Crimes  Enforcement  Network  of the  Treasury  Department  ("FinCEN")  proposed
regulations for comment.  In August 1999 FinCEN  announced the adoption of final
implementing regulations,  effective September 20, 1999. The regulations require
money services businesses to register with the Treasury Department,  by filing a
form to be adopted by FinCEN,  by December 31, 2001 and to  re-register at least
every two years  thereafter.  The regulations also require that a money services
business maintain a list of names and addresses of, and other information about,
its agents and that the list be made available to any requesting law enforcement
agency (through FinCEN).  That agent list must first be maintained by January 1,
2002 and must be updated at least  annually.  Though  FinCEN must adopt  further
regulations and procedures to more fully implement these requirements,  based on
these  regulations,  the Company  does not believe  that  compliance  with these
requirements will have any material impact on its operations.
<PAGE>

 In March 2000 FinCEN  adopted  additional  regulations,  implementing  the Bank
Secrecy Act, that are also addressed to money services businesses.  In pertinent
part, those regulations will require money services  businesses like the Company
to report  suspicious  transactions  involving  at least  $2,000 to FinCEN.  The
regulations   generally   describe   three  classes  of  reportable   suspicious
transactions  -- one or  more  related  transactions  that  the  money  services
business  knows,  suspects,  or has reason to suspect (1) involve  funds derived
from illegal  activity or are intended to hide or disguise  such funds,  (2) are
designed to evade the  requirements  of the Bank  Secrecy  Act, or (3) appear to
serve no business or lawful purpose. FinCEN indicated that it would subsequently
provide guidance in the form of examples of reportable transactions, but (so far
as the Company is aware) no such examples have yet been published.  Again,  this
reporting requirement will not apply until December 31, 2001, and because of the
Company's point-of-sale system and employee-training  programs, the Company does
not believe that compliance will have any material impact on its operations.

   In May  1997  FinCEN  proposed  for  comment  one  other  set of  regulations
implementing  the Bank Secrecy Act that could affect the Company.  That proposed
set of regulations  requires "money  transmitters"  and their "agents" to report
and keep records, and verify the senders of transactions in currency or monetary
instruments of at least $750, but not more than $10,000,  in connection with the
transfer of funds to a person outside the United States.  Because the Company is
an  agent  in  the  MoneyGram  network  and an  agent  for  MoneyLine  regarding
bill-payment services, the Company would be an agent of money transmitters under
this  proposed  set of  regulations.  In its August  1999  announcement,  FinCEN
indicated  that the  proposed  regulations  regarding  transmission  of funds to
persons  outside the United  States was being  deferred  and provided no further
explanation.

   Bank Loans. As a national bank, Goleta is subject to regulation, supervision,
and regular examination by various federal regulatory authorities, including the
Office  of the  Comptroller  of the  Currency  (the  "OCC").  To the  extent  an
examination involves review of the Bank Loans and related processes,  the OCC or
other  regulatory  authority may request,  and the Company will typically grant,
access to certain of the Company's locations,  personnel,  and records regarding
Bank Loans.  The OCC is  conducting  a scheduled  examination  of Goleta  during
September  and  October  2000,  and the  Company is  cooperating  with the OCC's
requests for information  regarding Bank Loans.  The Company does not anticipate
any material  adverse  consequences as the result of the current  examination of
Goleta or the  Company's  involvement  in that  examination.  But the  Company's
ability to offer Bank Loans at its  locations  could be  affected by any adverse
determination by the OCC or by other actions or determinations made from time to
time by any of the authorities that regulate Goleta.

   From time to time  local and  national  media  have  published  or  broadcast
stories that are critical of payday  loans and other small  short-term  consumer
loans.  Those  stories focus on the cost to a consumer for that service or loan,
which is higher than the interest typically charged by credit-card  issuers to a
more creditworthy  consumer.  This difference in credit cost is more significant
if a consumer does not promptly repay the payday loan or other  short-term loan,
but renews and  extends (or "rolls  over") that loan for one or more  additional
short-term  (e.g.,  two-week)  periods.  Those  stories  -- which  have not been
concerned  solely  with  ACE's  products  or  practices  --  typically  advocate
governmental  action to  eliminate or restrict  payday  loans and other  similar
loans. From time to time over the past two years,  bills have been introduced in
the United States  Congress and in certain state  legislatures,  and  regulatory
authorities  have proposed or publicly  addressed the  possibility  of proposing
regulations,  that would so eliminate or restrict payday loans and other similar
loans. So far as the Company is aware, however, none of those bills or proposals
have made any  significant  progress in the  legislative or regulatory  process.
Though the Company does not currently  anticipate any  legislative or regulatory
action  that would  prohibit  or  materially  restrict  its loan  services,  the
occurrence of any such  prohibition  or  restriction  in the future could have a
material adverse effect on the Company's business.

RELATIONSHIPS WITH THE MONEY ORDER AND MONEYGRAM SUPPLIERS

    Money  Order  Agreement.  In April 1998,  the  Company  signed a money order
agreement with Travelers Express which became effective December 17, 1998. Under
this five-year agreement,  the Company exclusively sells Travelers Express money
orders that bear the Company's logo. In conjunction  with this agreement and the
MoneyLine  Agreement  (which also has a five-year term), the Company received $3
million from Travelers Express in April 1998, received $400,000 in each of April
1999 and April 2000, and is entitled to receive an additional  $400,000 per year
for the next three years. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and Note
4 of Notes to Consolidated Financial Statements. If the money order agreement is
terminated  under certain  circumstances  before the expiration of its five-year
term, the Company will be obligated to repay a portion of the $3 million and the
annual amounts received from Travelers  Express.  The money order agreement with
Travelers  Express does not allow an extended  deferral of  remittances of money
order proceeds. The Company's payment and other obligations to Travelers Express
under the money  order  agreement  are  secured  by a  subordinated  lien on the
Company's  assets in  accordance  with the Amended  Collateral  Trust  Agreement
described under "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources -- Credit Facilities."

<PAGE>

   Existing  MoneyGram  Services.  The  Company is an agent for the  receipt and
transmission  of wire  transfers of money  through the  MoneyGram  network.  The
Company's agency relationship is currently governed by the 1996 MoneyGram Master
Agreement,  as amended (the  "Existing  MoneyGram  Agreement"),  with  MoneyGram
Payment Systems,  Inc. ("MPS"), an affiliate of Travelers Express.  The Existing
MoneyGram Agreement expires by its terms on December 31, 2000.
  In June 1996,  upon the extension of the Existing  MoneyGram  Agreement to its
current expiration date, the Company received a bonus of $2 million. The Company
also  receives  incentive  bonuses  under the Existing  MoneyGram  Agreement for
opening  or  acquiring  new  MoneyGram  service  locations.  All of the  bonuses
received  by the  Company  under  the  Existing  MoneyGram  Agreement  have been
deferred  and  included in "Other  liabilities"  in the  Company's  consolidated
balance  sheets and are  amortized  to  revenues  over the term of the  Existing
MoneyGram Agreement. During the fiscal year ended June 30, 2000, $2.6 million of
this amortization was recorded and included in money transfer services revenues.

  New  Money  Transfer  Agreement.  In June  2000,  the  Company  signed a Money
Transfer  Agreement with Travelers  Express and MPS to become effective upon the
expiration of the Existing MoneyGram Agreement (the "New MoneyGram  Agreement").
During the  seven-year  term of the New  MoneyGram  Agreement,  the Company will
exclusively  offer and sell  MoneyGram  wire  transfer  services.  Under the New
MoneyGram  Agreement (as under the Existing  MoneyGram  Agreement),  the Company
will earn  commissions  for each  transmission  and receipt of money through the
MoneyGram network effected at a Company-owned  location;  those commissions will
equal  varying  percentages  of the fees  charged  by MPS to  consumers  for the
MoneyGram services.

   Under the New  MoneyGram  Agreement,  the  Company  will also be  entitled to
receive a total of approximately $12.5 million in incentive bonuses,  payable in
equal monthly  installments  (without  interest) over the  seven-year  term. The
amount of those monthly installments will be subject to reduction if the Company
closes or sells a  significant  number  of those  locations  at which  MoneyGram
services  are  offered  at the  beginning  of the New  MoneyGram  Agreement.  In
addition,  the Company will be entitled to receive  certain  incentive  payments
regarding new MoneyGram  service  locations that it opens or acquires during the
term of the New MoneyGram Agreement.

  The Company's execution of the New MoneyGram Agreement extends and strengthens
the Company's  relationship  with  Travelers  Express and its  affiliates.  That
relationship  includes  the  money  order  agreement  as well  as the  MoneyLine
Agreement  for  bill-payment  services,  and  is  therefore  significant  to the
Company's  business.  Though the Company does not  anticipate  any disruption of
that  relationship,  if such a disruption were to occur, the Company's  business
could be materially and adversely affected.

BANK LOANS

   In August 1999 the Company  entered into a Master Loan Agency  Agreement (the
"Goleta  Agreement")  with Goleta  National  Bank,  a national  bank  located in
Goleta, California ("Goleta"). Under the Goleta Agreement, the parties agreed to
develop and implement an arrangement under which short-term loans made by Goleta
would be offered at the  Company's  owned  locations.  Since  entering  into the
Goleta Agreement,  the parties have developed software and various procedures to
offer the short-term loans  contemplated by the Goleta Agreement ("Bank Loans");
and since March 2000, the parties have implemented  those procedures and offered
Bank Loans at an increasing number of the Company's locations.  As of August 31,
2000, Bank Loans were offered at 896 of the Company's owned locations.

  The terms of the Bank Loans are  established,  and subject to change from time
to time, solely by Goleta.  Currently, a Bank Loan may be up to $500 and must be
repaid in 14 days.  A Bank Loan may be renewed  by a  borrower  only if at least
five percent of the  outstanding  principal  amount is paid. A borrower may have
only one Bank Loan outstanding at a time.
<PAGE>

  Goleta determines, in accordance with its credit criteria, those applicants to
whom a Bank  Loan  will be made.  The  Company's  involvement  in the Bank  Loan
process is limited to the electronic  transmission  of information and documents
in accordance with procedures  established by Goleta. A Bank Loan is funded into
the borrower's account at Goleta.  Access to those funds is through a debit card
and personal  identification  number  issued by Goleta in the Bank Loan process.
That debit card (with identification number) may be used at various ATM machines
or retail stores or at the Company's locations.

  A Bank Loan may be repaid at an ACE location,  for  transmission to Goleta and
credit to the  borrower's  bank  account.  Goleta has  appointed  the Company as
servicing agent for any necessary  collection  activity  regarding past-due Bank
Loans,  subject to Goleta's reasonable  direction.  Goleta has sole authority to
modify the terms, or extend the payment, of any Bank Loans.

     Under the  Goleta  Agreement,  the  Company  must  purchase  from  Goleta a
participation  interest  in all Bank Loans made on a  previous  day or  previous
days.  That  participation  entitles  the  Company to  substantially  all of the
interest  received by Goleta from the  borrowers,  and  subjects  the Company to
substantially  all of the risk of nonpayment by the borrowers.  The Company must
pay  participation  processing  fees  regarding  the Bank Loans under the Goleta
Agreement.

  The Company is responsible  under the Goleta Agreement for up to substantially
all of any  third-party  claims  regarding  the Bank  Loans  other  than  claims
resulting solely from Goleta's misconduct.

  The Company has agreed in the Goleta  Agreement  not to offer at its locations
any  short-term  loan that is  substantially  similar to the Bank Loans,  except
where the Company is precluded  from  offering  Bank Loans by contract,  law, or
regulatory  authority.  The Company  may offer its payday loan  service or other
short-term loans where Bank Loans cannot be offered. Goleta agreed in the Goleta
Agreement  not  to  offer  or  make  Bank  Loans  or any  substantially  similar
short-term  loan  anywhere in the United States except at an office of Goleta or
as required by law. The parties'  exclusivity  obligations  will be effective so
long as applications  for a minimum number of Bank Loans are submitted to Goleta
from ACE locations during each 12-month period beginning April 14, 2000.

  The term of the  Goleta  Agreement  will  expire  on April  13,  2005,  at the
earliest.  That term will be  extended  annually if  applications  for a certain
number of Bank Loans are  submitted  to Goleta  from ACE  locations  during each
12-month period beginning April 14, 2000.

  Either  party may  terminate  the  Goleta  Agreement  because of (1) the other
party's  insolvency,  (2) the other party's failure to make any required payment
or to perform any other material  obligation that is not cured after notice,  or
(3) any action by a regulatory  authority  that requires  Goleta to cease making
Bank Loans or imposes  restrictions  that would  materially and adversely affect
Goleta's ability to make Bank Loans. In addition, the Company may terminate upon
its  determination  that any  change by Goleta in the terms of the Bank Loans or
its credit criteria has adversely  affected or would adversely affect the market
for Bank Loans.

  Because the  Company's  economic  interest in the Bank Loans  results from the
purchase of participations, the Company is dependent on Goleta's originating the
Bank Loans.  If any change in the terms of, or the credit criteria for, the Bank
Loans  were to  result  in  losses  that the  Company  deems  unacceptable,  the
Company's  sole legal  recourse  would be exercise  its right to  terminate  the
Goleta Agreement.

  The Goleta  Agreement  permits  the  Company to expand  its  offering  of loan
services; the Company can offer Bank Loans at many more of its locations than it
could offer its "payday loan" service.  If the Goleta  Agreement were terminated
or the  Company's  ability to offer Bank  Loans at a  significant  number of its
locations were otherwise  restricted,  then (even though the Company might again
be able to  offer a  payday  loan  service  at  many  locations)  the  Company's
loan-related revenues could be materially and adversely affected.

INVESTMENT IN EPACIFIC

  In March and  April  2000,  the  Company  invested  a total of $1  million  in
ePacific  Incorporated  ("ePacific"),  a  private  company  in the  business  of
providing  customized  debit-card  payment systems and electronic funds transfer
processing  services,  which  has been  recorded  under the cost  method  and is
included in other assets. ePacific,  formerly a controlled subsidiary of Goleta,
provides the debit-card system and processing services to Goleta to enable it to
make the Bank Loans described above in "-- Bank Loans."
<PAGE>

  The Company's  investment  in ePacific was made at the same times,  and on the
same terms,  as the  investment by two venture  capital  investors.  The Company
purchased  approximately  14% of the shares of  ePacific's  Series A Convertible
Preferred Stock  purchased by the group of investors.  The terms of those shares
are  typical  of  preferred  stock  issued  and  purchased  in  venture  capital
investments,  and include the right to periodic  dividends  from  ePacific,  the
right to a preferential distribution upon liquidation of ePacific, voting rights
with ePacific  common stock,  and the right to convert the preferred  stock into
ePacific  common stock.  Under a  stockholders'  agreement with ePacific and its
other  stockholders,  the Company agreed to certain  restrictions on transfer of
its ePacific stock,  received certain securities  registration  rights regarding
resale of its ePacific stock,  and received the right to designate one person to
serve as a director of  ePacific.  The Company  designated  Jay  Shipowitz,  its
President and Chief Operating Officer, to serve as a director of ePacific.

  The  investment  in ePacific was  motivated by the  Company's  belief that the
market for  financial-services  products  delivered through debit-ATM cards will
continue  to expand;  a reason for that  expansion  is the  technology  that now
permits  value to be placed or "loaded" on a debit-ATM  card for a consumer in a
retail environment. The Company also believes that ePacific has developed unique
debit-card  processing  applications  for  internet  users  that may allow it to
compete effectively with some of the larger debit-card processors.

ARRANGEMENTS REGARDING SECURED NOTES

   In December 1996, the Company  consummated a private placement of $20 million
of its 9.03% Senior  Secured  Notes  ("Notes") and issued the Notes to Principal
Life  Insurance  Company  (formerly  known as  Principal  Mutual Life  Insurance
Company)  ("Principal") under the terms of a Note Purchase Agreement dated as of
November  15,  1996 (the "Note  Purchase  Agreement").  The net  proceeds of the
issuance  of the  Notes  were  used to pay in full  the then  outstanding  $18.5
million principal amount of the Company's term-loan  indebtedness  (incurred for
acquisitions and capital  expenditures),  plus corresponding  interest and fees,
and for general corporate purposes of the Company.

  Interest on the unpaid  principal  amount of the Notes,  accruing at 9.03% per
annum,  is  payable  semiannually  on May  15  and  November  15 of  each  year,
commencing  May 15, 1997.  The principal  amount of the Notes is payable in five
equal  installments  of $4  million  on  November  15 of each  year,  commencing
November  15,  1999.  All  principal  and  accrued  interest  is  payable at the
scheduled maturity of the Notes on November 15, 2003.

  The  Company  may prepay the Notes,  at any time or from time to time,  in the
principal amount of at least $1 million,  plus accrued interest on the principal
amount  being  prepaid,  plus an amount  approximately  equal to the  discounted
present  value of the return that the  holders of the  prepaid  Notes would have
received if the prepayment were not made. Any prepayment will ratably reduce the
amount of each scheduled principal payment on the Notes due thereafter.

  The Note Purchase Agreement contains certain  restrictive  covenants affecting
the business and affairs of the Company and its  subsidiaries.  Those  covenants
address,  among other things, the maintenance of specified financial ratios, the
incurrence and payment of other  indebtedness,  the  disposition of assets or of
the ownership of any subsidiary of the Company,  the grant or existence of other
liens on the  assets  of the  Company  and its  subsidiaries,  and  transactions
between the Company or its subsidiaries and any of their affiliates.

  The Note Purchase Agreement also specifies events of default that could result
in the  acceleration of the maturity of the Notes.  Those events include (a) any
failure by the Company to pay any amount due under the Notes, (b) any failure by
the  Company to comply with  various  covenants  set forth in the Note  Purchase
Agreement  and  ancillary  documents,  (c) any  misrepresentation  or  breach of
warranty  by  the  Company,  (d)  any  failure  by  the  Company  or  any of its
subsidiaries  to pay, or perform its obligations  under,  any  indebtedness  for
borrowed  money or under  capital  leases in excess of $1  million,  (e) various
events of bankruptcy  or  insolvency of the Company or any of its  subsidiaries,
and (f) any final  judgment  of any court in excess of $1  million  against  the
Company or any of its  subsidiaries  remaining in effect 30 days after the entry
thereof.
<PAGE>

   The Company's  obligations under the Notes, the Note Purchase Agreement,  and
all ancillary  documents entered into with Principal are secured by liens on all
of the assets of the Company.  Concurrent with the Note Purchase Agreement,  the
Company entered into a Collateral  Trust Agreement dated as of November 15, 1996
(the "Original  Collateral Trust Agreement"),  with Wilmington Trust Company, as
trustee (the "Collateral Trustee"),  Principal,  and the Company's other secured
lender at the time. The Original Collateral Trust Agreement created a collateral
trust to secure the Company's  obligations to both of its then existing  secured
lenders and, under  conditions set forth therein,  future secured lenders to the
Company.  The Original  Collateral Trust Agreement was amended and superseded in
connection with the Company's Credit  Agreement  described below under "- Credit
Facilities."

CREDIT FACILITIES

  In July 1998, the Company entered into a Credit  Agreement with a syndicate of
banks  (the  "Lenders")  represented  by  Wells  Fargo  Bank  (Texas),  National
Association  ("Wells  Fargo  Bank"),  as lead  agent and Chase  Bank of Texas as
co-agent (the "Credit Agreement").  The Credit Agreement was renewed in December
1999,  with Wells  Fargo Bank as lead  agent.  The credit  facilities  under the
Credit  Agreement  consist  of a  revolving  (line-of-credit)  facility  of $130
million (the "Revolving  Facility") and a term-loan facility of $35 million (the
"Term-Loan  Facility").  The Revolving  Facility is used for working capital and
general corporate  purposes of the Company,  and the Term-Loan  Facility is used
for store  construction  and  relocation and other capital  expenditures  of the
Company, including acquisitions,  and refinancing other debt. Also, upon certain
conditions,  in addition to the  Revolving  Facility,  the Company has available
from Wells Fargo Bank (a) an additional  25-day revolving advance facility of up
to $25  million  and  (b) a  standby  letter-of-credit  facility  of up to  $1.5
million. The terms of the Credit Agreement and ancillary documents are described
in more detail at "Management's  Discussion and Analysis of Financial  Condition
and  Results  of  Operations  -  Liquidity   and  Capital   Resources  -  Credit
Facilities."

ITEM 2. PROPERTIES

   All but two of the  Company's  stores  are  leased,  generally  under  leases
providing  for an initial term of three years and renewal terms of from three to
six years.  The Company  acquired,  as part of the Check Express  acquisition in
February  1996,  and  still  owns  the  land and  building  at which  one of the
Company's stores is located in Indianapolis,  Indiana.  Management believes that
the  land  and  building  are  suitable  for  the  successful   operation  of  a
Company-owned  store.  The Company's  headquarters  offices in Irving,  Texas, a
suburb of  Dallas,  occupy  approximately  40,000  square  feet under a 62-month
lease, the term of which expires in April 2001.

ITEM 3. LEGAL PROCEEDINGS

  The Company has entered into an  agreement  to settle the lawsuit  against the
Company  in  Arkansas,  Angie  Gwatney  v.  Ace Cash  Express,  Inc.  Under  the
settlement,  qualified customers will receive  certificates that may be redeemed
for prepaid  telephone cards from the Company.  The face amount of the telephone
cards  will  equal  75% of the  total  amount of fees  ($2.2  million)  that the
customers paid the Company in deferred-presentment transactions from February 9,
1996  through  June 15, 1999.  It is  impossible  to predict the number and face
amount  of the  telephone  cards  that  the  Company  will  have to  provide  to
customers.  But, based on its estimate of the  distribution of those cards,  the
Company has provided in its fiscal 2000 financial statements a total of $640,000
to  satisfy  its  settlement  obligations.  The  settlement  agreement  has been
approved by the court,  and the Company believes that the approval will be final
and effective on October 5, 2000.

  On December 17, 1999, a lawsuit regarding the Company's "payday loan" service,
Eva J. Rowings v. Ace Cash Express,  Inc.,  was filed against the Company in the
United  States  District  Court  for  the  Southern  District  of  Indiana.  The
plaintiff,  for herself and others  similarly  situated since December 17, 1998,
alleges that the Company's  disclosures to recipients of payday loans in Indiana
do not comply with the requirements of the Truth in Lending Act and Regulation Z

<PAGE>

under federal law and of the Uniform Consumer Credit Code in Indiana. On January
27, 2000,  the plaintiff  filed an amended  complaint  alleging that the Company
violated Indiana Code 35-45-7-2 (Indiana's  "loansharking" statute) and that the
loans are therefore void. The plaintiff  seeks monetary  damages as specified by
statute as well as  attorneys'  fees and court costs from the  Company.  Because
this lawsuit purports to be a class action,  the amount of damages for which the
Company may be responsible is necessarily uncertain. That amount would depend on
proof of the  allegations,  on the  number of  recipients  of  payday  loans who
constitute the class of plaintiffs (if permitted by the court),  and on proof of
actual damages  sustained by the plaintiffs.  Under each of the federal Truth in
Lending Act and the Indiana  Uniform  Consumer Credit Code, if the court were to
certify  this  lawsuit as a class  action and if the Company  were found to have
violated that statute,  the Company's  maximum liability would be the sum of (1)
any actual damages sustained by the plaintiffs as a result of the violation, (2)
the lesser of  $500,000 or 1% of the  Company's  net worth,  and (3)  reasonable
attorneys'  fees and  court  costs.  Also,  if the  Company  were  found to have
violated Indiana Code 35-45-7-2 in connection with the payday loans to the class
of  plaintiffs,  those  loans could be  declared  void.  The Company has filed a
motion to dismiss all federal law claims asserted in the complaint and has asked
the court to decline  to  exercise  jurisdiction  over the  remaining  state law
claims if the federal law claims are  dismissed.  The court also is  considering
whether to certify to the Indiana  Supreme  Court  certain state law issues that
are common to this case and other  "payday  loan"  cases that are pending in the
court against other payday lenders.

  On January 20, 2000,  the  plaintiffs in the lawsuit filed against the Company
in the United States District Court for the Middle District of Florida,  Gary M.
Kane and Wendy Betts v. Ace Cash Express,  Inc., et al.,  voluntarily  dismissed
their remaining federal Truth in Lending Act claims, and therefore that lawsuit,
without  prejudice.  On  March  22,  2000,  however,  those  plaintiffs  and  an
additional  plaintiff  filed a lawsuit,  Wendy Betts,  John Cardegna and Gary M.
Kane v. Ace Cash  Express,  Inc.,  et al., in a Florida  state  Circuit Court in
Orange County,  Florida.  This lawsuit was filed against the Company, its wholly
owned  subsidiary  Check  Express,   Inc.,  and  persons  who  "own,  organized,
developed,  control,  expanded,  promoted,  and profited  from" alleged  illegal
activities of the Company and Check Express, Inc. described in the complaint. In
this lawsuit the plaintiffs,  for themselves and others similarly situated since
March 22,  1996,  alleged  that the  Company's  deferred-deposit  activities  in
Florida  violated  certain  Florida lending  practices and usury  statutes,  the
Florida Consumer  Finance Act, the Florida  Deceptive and Unfair Trade Practices
Act, and the Florida Civil Remedies for Criminal  Practices Act and  constituted
fraud.  The  plaintiffs  sought an injunction  against any such further  alleged
illegal  activities  as well as actual and  punitive  damages of various  kinds,
including  forfeiture of the total amount of the  deferred-deposit  transactions
with the purported  class of customers in Florida,  an amount equal to twice the
fees and  charges  received by the Company  from those  transactions,  an amount
equal  to  three  times  the  damages  suffered  by  the  purported  class,  the
plaintiffs' attorneys' fees, and court costs. On September 1, 2000, however, the
state  court  dismissed  the  complaint,  because of defects in the  plaintiffs'
pleadings,  without prejudice.  The Company does not know whether the plaintiffs
will attempt to cure the defects in order to maintain this lawsuit.

  On March 30,  2000,  the  Company  was  served  with a lawsuit  regarding  the
Company's "payday loan" service in Louisiana,  Shirley Porter and Joyce Davis v.
Ace Cash  Express,  Inc.,  filed in the  United  States  District  Court for the
Eastern  District of  Louisiana.  This lawsuit was filed against the Company and
persons who "have  owned,  organized,  developed,  controlled  and  promoted and
profited  from"  alleged  illegal  activities  of the Company  described  in the
complaint. The plaintiffs,  for themselves and others similarly situated, allege
that the Company's lending and collection  activities  regarding payday loans in
Louisiana violated the Louisiana Small Loan Act, resulted in unconscionable (and
therefore unenforceable) contracts, involved the charging and collection of fees
that were excessive under the Louisiana  Consumer Credit Law,  involved charging
and collecting  usurious  interest under Louisiana law, and violated the federal
Racketeer  Influenced and Corrupt  Organizations  (RICO) Act. The class that the
plaintiffs seek to represent would consist of customers of the Company's  payday
loan service in Louisiana  since  February 25,  1999,  regarding  the  Louisiana
state-law claims, and since February 25, 1996, regarding the RICO Act claim. The
plaintiffs  seek  an  injunction   against  any  such  further  alleged  illegal
activities as well as damages of various kinds, including an amount equal to all
fees and  charges  received  by the  Company  from the payday  loans made to the
purported  class of customers in  Louisiana,  an amount equal to three times the
damages suffered by the purported  class,  the plaintiffs'  attorneys' fees, and
court  costs.  Based on an  interpretive  letter  from the  Louisiana  Office of
Financial  Institutions,  on June 22,  2000,  the  Company  filed a  motion  for
judgement on the pleadings, which remains pending before the court.

  On December 6, 1999, a complaint  was filed in a lawsuit  against the Company,
Eugene R. Clement v. Ace Cash Express, Inc., in a Florida state Circuit Court in
Hillsborough County,  Florida.  The plaintiff,  for himself and others similarly
situated,  alleged that the Company's  collection  activities  regarding  unpaid
amounts  under  deferred-deposit  transactions  in Florida  violated the Florida
Deceptive and Unfair Trade Practices Act. In that  complaint,  the plaintiff did
not seek  damages,  but sought only an  injunction  against the alleged  illegal
activities,  attorneys' fees, and court costs. On March 15, 2000,  however,  the

<PAGE>

plaintiff  amended his  complaint in this  lawsuit to allege that the  Company's
deferred-deposit  activities  violated  the federal  Truth in Lending Act and to
seek  damages as  provided  by that Act.  On March 27,  2000,  this  lawsuit was
removed  by the  Company  to the  United  States  District  Court for the Middle
District of Florida.

  On April 14,  2000,  another  complaint  was filed in a  lawsuit  against  the
Company, Neil Gillespie v. Ace Cash Express, Inc., in the United States District
Court for the Middle District of Florida. The plaintiff,  for himself and others
similarly situated,  alleges that the Company's  deferred-deposit  activities in
Florida  violated the federal Truth in Lending Act, the Florida usury laws,  and
the Florida  Deceptive and Unfair Trade  Practices  Act. The plaintiff  seeks an
injunction against any such further alleged illegal activities as well as actual
and punitive damages of various kinds, including damages under the federal Truth
in Lending  Act, an amount  equal to twice the fees and charges  received by the
Company  from its  deferred-deposit  transactions  with the  purported  class of
customers in Florida, the plaintiffs' attorneys' fees, and court costs. By order
dated August 8, 2000, this lawsuit and the Clement lawsuit were  consolidated by
the United States District Court for the Middle  District of Florida.  On August
15, 2000, the plaintiffs filed an amended  consolidated  complaint that restated
in a single complaint the previous claims asserted against the Company under the
federal Truth in Lending Act, the Florida usury laws, and the Florida  Deceptive
and Unfair Trade  Practices  Act. On August 25, 2000, the Company filed a motion
to dismiss that complaint, which remains pending before the court.

  On May 11, 2000, a complaint was filed in a lawsuit against the Company,  Edna
Jordan v. Ace Cash  Express,  Inc.,  in an Alabama state Circuit Court in Morgan
County,  Alabama.  The  plaintiff,  for herself and others  similarly  situated,
alleges that the  Company's  activities  violate the Alabama  Small Loan Act and
other Alabama lending and usury laws. The plaintiff seeks an injunction  against
any such further alleged illegal activities as well as unspecified  compensatory
and punitive  damages.  Nevertheless,  the  plaintiff  was not a customer of the
Company,  but was a customer of one of the Company's  franchisees  (not named in
the  lawsuit).  Because the Company does not offer  "payday  loans" at its owned
locations in Alabama,  the plaintiff is apparently  alleging that the Company is
responsible  for the  franchisee's  payday-lending  activities  in Alabama.  The
Company has filed a motion for summary judgment denying any such responsibility,
and that motion remains pending before the court.

  Because each of these  pending  lawsuits  purports to be a class  action,  the
amount of damages  for which the Company  might be  responsible  is  necessarily
uncertain.  Regarding  each lawsuit,  that amount would depend upon proof of the
allegations,  on  the  number  of  customers  of the  payday  loan  service  who
constitute the class of plaintiffs (if permitted by the court),  and on proof of
actual damages  sustained by the plaintiffs.  The Company  believes that each of
these  lawsuits  is without  merit.  The Company  denies all of the  plaintiffs'
material  allegations in these  lawsuits and intends to vigorously  defend these
lawsuits.

  On May 19, 2000, the Company was served with an Economic Crimes Subpoena Duces
Tecum by the  office  of the  Attorney  General  of the  State of  Florida.  The
subpoena requested the Company to produce,  for review by the Attorney General's
office, various documents and records relating primarily to the Company's payday
lending activities in Florida. On or about the same date, the Attorney General's
office also served  substantially  similar  subpoenas on the three other largest
payday  lenders in Florida.  The Company has produced the  documents and records
that the Attorney  General's office has required to date. The Attorney General's
office has not notified the Company of or (to the Company's  knowledge) publicly
announced the purpose or the scope of the investigation.  The Attorney General's
office has not  notified  the  Company of any  allegation  that the  Company has
violated any Florida law, and the Company does not expect any such allegation to
result from the investigation.

  The Company is also involved  from time to time in various  legal  proceedings
incidental  to the conduct of its  business.  Management  believes  that none of
these legal  proceedings  will result in any  material  impact on the  Company's
financial condition and results of operations.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   No matters were submitted to a vote of the shareholders of the Company during
the fourth quarter of fiscal 2000.

<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
           MATTERS

   The  Company's  Common Stock is quoted on The Nasdaq Stock Market  ("NASDAQ")
under the symbol "AACE".  At September 14, 2000,  there were  approximately  107
holders  of  record of the  Common  Stock and  there  were  approximately  1,500
beneficial holders of the Common Stock held in nominee or street name.

   The  following  table sets  forth the high and low sale  prices of the Common
Stock as reported by NASDAQ for the past two fiscal years:
<TABLE>
<CAPTION>
                                                 HIGH              LOW
                                                ------            ------
      Fiscal 1999
      -----------
      <S>                                       <C>               <C>
      Quarter ended September 30, 1998          20-1/2            11-3/4
      Quarter ended December 31, 1998           16-1/2            11-1/4
      Quarter ended March 31, 1999              15                12-1/8
      Quarter ended June 30, 1999               15-1/16           12-3/4

      Fiscal 2000
      -----------
      Quarter ended September 30, 1999          14-7/8            14-1/2
      Quarter ended December 31, 1999           19                18-1/4
      Quarter ended March 31, 2000              17-3/4            17-1/8
      Quarter ended June 30, 2000               12-5/32           11-7/8
</TABLE>

   On September  14, 2000,  the last  reported sale price of the Common Stock on
NASDAQ was $11.125 per share.

   The Company has never paid  dividends on the Common Stock and has no plans to
pay dividends in the foreseeable  future. In addition,  the Company's ability to
pay cash  dividends  is  currently  limited  under  the  Credit  Agreement  (see
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity and Capital Resources - Credit Facilities").


<PAGE>
<TABLE>
<CAPTION>

ITEM 6. SELECTED FINANCIAL DATA
                                                                                       YEAR ENDED JUNE 30,
                                                          ------------------------------------------------------------------------
                                                             2000            1999           1998            1997           1996
                                                          -----------    -----------    -----------     -----------    -----------
                                                                      (in thousands, except per share and store data)
STATEMENT OF OPERATIONS DATA:
<S>                                                        <C>             <C>            <C>              <C>            <C>
Revenues                                                   $140,636        $122,314       $100,194         $87,392        $68,959
Store expenses                                               94,668          80,943         67,103          59,376         48,552
Region expenses                                              11,119           9,369          8,353           7,477          5,647
Headquarters expenses                                         8,247           7,673          7,198           6,106          4,744
Franchise expenses                                            1,063           1,288            965           1,046            458
Other depreciation and amortization                           3,798           4,236          3,502           3,024          2,152
Interest expense, net                                         6,123           4,476          2,437           2,271          1,714
Other expenses                                                  955             689             49             213            236
                                                          ----------     -----------    -----------     -----------    -----------
Income before income taxes                                   14,663          13,640         10,587           7,879          5,456
Income taxes                                                  5,797           5,390          4,185           3,113          2,130
                                                          ----------     -----------    -----------     -----------    -----------
Net income before cumulative effect of
  accounting change (1)                                     $ 8,866         $ 8,250        $ 6,402         $ 4,766        $ 3,326
                                                          ==========     ===========    ===========     ===========    ===========

Diluted earnings per share before cumulative effect
of accounting change (1)                                      $ .86          $  .80         $  .63          $  .48          $ .35
                                                          ==========     ===========    ===========     ===========    ===========

Weighted average number of shares (2)                        10,361          10,283         10,215           9,845          9,570

------------------------------------------------------------------------------------------------------------------------------------

BALANCE SHEET DATA:
Cash and cash equivalents                                  $105,577         $59,414        $60,168         $55,494        $56,603
Total assets                                                221,423         145,233        134,635         124,350        114,684
Term advances                                                18,500          10,500          7,073           8,209         16,969
Money order principal payable                                10,487           5,340         47,486          41,281         35,487
Revolving advances                                           95,000          40,100          1,932           7,166         21,157
Senior secured notes payable                                 16,180          20,226         20,226          20,231              -
Shareholders' equity                                         55,159          48,274         38,951          31,056         25,236

------------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL STATISTICAL DATA:
Company-owned stores in operation:
   Beginning of year                                            798             683            617             544            452
     Acquired                                                    36              35             15              46             69
     Opened                                                      99              99             62              45             33
     Closed                                                    (18)            (19)           (11)            (18)           (10)
                                                          ----------     -----------    -----------     -----------    -----------
   End of year                                                  915             798            683             617            544
                                                          ==========     ===========    ===========     ===========    ===========

Percentage increase in comparable store revenues
from prior year:
  Exclusive of tax-related revenues (3)                        7.1%           10.6%           8.0%            5.5%           4.1%
  Total revenues (4)                                           6.9%           10.8%           6.9%            6.3%           4.7%

Capital expenditures (in thousands)                         $12,255         $10,089         $5,742          $4,868         $3,435
Cost of net assets acquired (in thousands)                  $11,359          $8,378         $4,708         $10,766        $14,432

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Before a  cumulative  effect of  accounting  change  recorded  in the three
     months ended September 30, 1999, of $0.6 million, net of a $0.4 million tax
     benefit, relating to the adoption of Statement of Position 98-5, "Reporting
     on the Costs of Start-up Activities."

(2)  Includes common shares and dilutive shares.

(3)  Change in revenues computed excluding  electronic tax filing and tax refund
     check cashing for the years compared.

(4)  Calculated based on the changes in revenues of all stores open for the full
     years compared.
<PAGE>
<TABLE>
<CAPTION>

                                                                 SELECTED FINANCIAL DATA (CONTINUED)

                                                                        YEAR ENDED JUNE 30,
                                                 -------------------------------------------------------------
                                                   2000          1999          1998        1997        1996
                                                 ---------    ---------      ---------    -------     -------
OPERATING DATA (CHECK CASHING AND
MONEY ORDERS):

<S>                                                   <C>          <C>         <C>           <C>          <C>
Face amount of checks cashed
  (in millions)                                  $  3,839     $  3,373     $  2,898     $  2,621     $  2,144
Face amount of money orders sold
  (in millions)                                  $  1,585     $  1,905     $  1,858     $  1,812     $  1,531
Face amount of money orders sold as a
  percentage of the face amount of checks
  cashed                                            41.3%        56.5%        64.1%        69.1%        71.4%
Face amount of average check                     $    339     $    320     $    305     $    291     $    285
Average fee per check                            $   7.92     $   7.47     $   7.26     $   6.97     $   6.81
Fees as a percentage of average check               2.33%        2.33%        2.38%        2.40%        2.39%
Number of checks cashed (in thousands)             11,317       10,556        9,496        9,020        7,535
Number of money orders sold
  (in thousands)                                   12,339       14,495       14,146       13,608       11,835

COLLECTIONS DATA:

Face amount of returned checks (in
  thousands)                                     $ 16,548     $ 12,442     $ 10,193     $ 10,399     $  8,661
Collections (in thousands)                         10,788        7,423        6,301        6,554        5,004
                                                  --------     -------     ---------    --------     --------
Net write-offs (in thousands)                    $  5,760     $  5,019     $  3,892     $  3,845     $  3,657
                                                  ========     =======     =========    ========     ========

Collections as a percentage of
  returned checks                                   65.2%       59.7%         61.8%        63.0%        57.8%
Net write-offs as a percentage of
  revenues                                           4.1%        4.1%          3.9%         4.4%         5.3%
Net write-offs as a percentage of
  the face amount of checks cashed                   .15%        .15%          .13%         .15%         .17%

-------------------------------------------------------------------------------------------------------------------------------

OPERATING DATA (SMALL CONSUMER LOANS):

Volume (in thousands)                            $137,015     $105,765     $ 69,182     $ 39,336            -
Average advance                                  $    240     $    200     $    177     $    147            -
Average finance charge                           $  34.51     $  30.30     $  27.51     $  25.03            -
Number of loans made (in thousands)                   557          460          338          229            -

COLLECTIONS DATA:

Net charge-offs (in thousands)                   $  4,177     $  2,786     $  1,807     $  1,183            -
Net charge-offs as a percentage of
  small consumer loan revenue                       23.4%        20.0%        19.5%        20.7%            -
Net charge-offs as a percentage of
  small consumer loan volume                         3.1%         2.6%         2.6%         3.0%            -

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

REVENUE ANALYSIS
----------------------------------------------------------------------------------------------------------------------------
                                                                      YEAR ENDED JUNE 30,
                                     ---------------------------------------------------------------------------------------
                                                  (in thousands)                          (percentage of revenue)
                                        2000           1999           1998           2000           1999           1998
                                     ------------   ------------   ------------   ------------   ------------   ------------
<S>                                     <C>            <C>            <C>             <C>             <C>           <C>
Check cashing fees                      $ 77,574       $ 68,249       $ 60,416      55.2%           55.8%          60.3%
Loan fees and interest                    17,872         14,257         10,137       12.7            11.7           10.1
Tax check fees                            12,067         10,590          8,571        8.6             8.7            8.5
Bill-payment services                      9,447          8,394          4,146        6.7             6.8            4.1
Money transfer services                    8,944          7,951          6,082        6.4             6.5            6.1
Money order fees                           7,032          5,332          2,879        5.0             4.4            2.9
New customer fees                          2,164          2,296          2,207        1.5             1.9            2.2
Franchise revenues                         2,537          2,117          1,665        1.8             1.7            1.7
Other fees                                 2,999          3,128          4,091        2.1             2.5            4.1
                                     ------------   ------------   ------------   ------------   ------------   ------------
Total revenue                           $140,636       $122,314       $100,194      100.0%         100.0%          100.0%
                                     ============   ============   ============   ============   ============   ============

Average revenue per store
  (excluding franchise revenues)         $ 161.1        $ 162.3        $ 151.6
</TABLE>

FISCAL 2000 COMPARED TO FISCAL 1999.  Revenues increased $18.3 million,  or 15%,
from $122.3  million in the year ended June 30, 1999,  to $140.6  million in the
year ended June 30, 2000. This revenue growth  resulted from a $7.5 million,  or
6.9%,  increase in comparable  Company-owned  store  revenues (651 stores) and a
$10.8 million  increase from stores which were opened or acquired after June 30,
1998, and were therefore not open for both of the full periods compared. Average
revenue per store declined by $1,200 because of the significant number of stores
open for two years or less;  revenues from new stores must typically be built up
over the first few  years of  operation.  The  number  of  Company-owned  stores
increased by 117, or 15%,  from 798 stores open at June 30, 1999,  to 915 stores
open at June 30, 2000.  The increase in total check  cashing fees  accounted for
59% of the total  revenue  increase;  the  increase  in loan  fees and  interest
accounted for 20% of the total revenue increase; and the increase in money order
fees accounted for 9% of the total revenue increase.

Check cashing fees,  including tax check fees,  increased $10.8 million, or 14%,
from $78.8 million in fiscal 1999 to $89.6 million in fiscal 2000. This increase
resulted  from a 7%  increase  in the total  number of  checks  cashed  and a 6%
increase in the average  fee per check due to the  increase in the average  size
check. Loan fees and interest  increased $3.6 million,  or 25%, to $17.9 million
in fiscal  2000 as  compared  to $14.3  million in fiscal  1999.  This  increase
resulted from the  introduction  of the Goleta National Bank loan product in the
last few months of fiscal 2000 and the expansion of the loan business to 19 more
states than in fiscal 1999. Money order fees increased $1.7 million,  or 32%, as
a result of  increased  money order  pricing,  enabled by the  Company's  Credit
Agreement  and the money order  agreement  with  Travelers  Express  (which were
effective for only  approximately  half of fiscal 1999).  Bill-payment  services
increased  $1.0 million,  or 13%,  principally  as a result of new  bill-payment
contracts and growth in payment  revenue from existing  bill-payment  contracts.
Money transfer services revenues increased $1.0 million, or 13%,  principally as
a result of acquired stores and related revenue guarantees and bonuses.

During fiscal 2000, the Company sold six franchised stores, opened 56 franchised
stores, acquired seven former franchised stores and closed six franchise stores.
Franchise  revenues  consist of royalties,  initial  franchise fees, and buyback
fees.  Franchise  revenues  increased $0.4 million,  or 20%, from fiscal 1999 to
fiscal 2000, due to the increase in the number of franchised stores.
<PAGE>

FISCAL 1999 COMPARED TO FISCAL 1998.  Revenues increased $22.1 million,  or 22%,
from $100.2  million in the year ended June 30, 1998,  to $122.3  million in the
year ended June 30, 1999. This revenue growth  resulted from a $9.8 million,  or
10.8%,  increase in comparable  Company-owned  store revenues (589 stores) and a
$12.3 million  increase from stores which were opened or acquired after June 30,
1997,  and were  therefore not open for both of the full periods  compared.  The
number of Company-owned stores increased by 115, or 17%, from 683 stores open at
June 30, 1998, to 798 stores open at June 30, 1999.  The increase in total check
cashing fees  accounted for 45% of the total revenue  increase;  the increase in
loan fees and interest accounted for 19% of the total revenue increase;  and the
increase  in  bill-payment  services  accounted  for  19% of the  total  revenue
increase.

Check cashing fees,  including tax check fees,  increased $9.9 million,  or 14%,
from $69.0 million in fiscal 1998 to $78.8 million in fiscal 1999. This increase
resulted  from an 11%  increase  in the total  number of checks  cashed and a 3%
increase in the average  fee per check due to the  increase in the average  size
check. Loan fees and interest  increased $4.1 million,  or 41%, to $14.3 million
in fiscal  1999 as  compared  to $10.1  million in fiscal  1998.  This  increase
resulted from an increase in the number of stores  offering the  Company's  loan
products and an increase in the loan volume at stores previously  offering those
products.  Bill-payment services increased $4.2 million, or 102%, principally as
a result of new  bill-payment  contracts  and  growth in  payment  revenue  from
existing bill-payment contracts. Money transfer services revenues increased $1.9
million, or 31%,  principally as a result of acquired stores and related revenue
guarantees and bonuses.  Money order fees  increased $2.5 million,  or 85%, as a
result of increased  money order  pricing,  enabled by the  Company's new Credit
Agreement and the new money order  agreement with Travelers  Express (which were
effective for approximately half of fiscal 1999).

During fiscal 1999, the Company sold 10 franchised stores,  opened 42 franchised
stores, and acquired four former franchised  stores.  Franchise revenues consist
of royalties,  initial  franchise  fees,  and buyback fees.  Franchise  revenues
increased  $0.5  million,  or 27%,  from fiscal 1998 to fiscal 1999,  due to the
increase in the number of franchised stores.

Other fees  decreased  $1.0  million,  or 24%, as a result of  decreases in food
stamp distribution revenue and other miscellaneous product revenue.

<TABLE>
<CAPTION>

STORE EXPENSE ANALYSIS                                                YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------------------------------------------------------
                                                (in thousands)                           (percentage of revenue)
                                          2000           1999           1998           2000           1999           1998
                                     ------------   ------------   ------------   -----------    -----------    -----------

<S>                                      <C>            <C>            <C>              <C>            <C>            <C>
  Salaries and benefits                  $38,639        $32,435        $27,975          27.4   %       26.5   %       27.9  %
  Occupancy                               21,507         18,381         15,204          15.3           15.0           15.2
  Armored and security                     5,608          5,144          4,200           4.0            4.2            4.2
  Returns and cash shorts                  9,037          8,870          6,057           6.4            7.3            6.0
  Loan losses                              4,177          2,786          1,807           3.0            2.3            1.8
  Depreciation                             5,429          4,728          4,083           3.9            3.9            4.1
  Other                                   10,271          8,599          7,777           7.3            7.0            7.8
                                     ------------   ------------   ------------   -----------    -----------    -----------
  Total store expense                    $94,668        $80,943        $67,103          67.3   %       66.2   %       67.0  %
                                     ============   ============   ============   ===========    ===========    ===========

  Average per store expense              $ 110.5        $ 109.3        $ 103.2
</TABLE>


FISCAL 2000 COMPARED TO FISCAL 1999. Store expenses increased $13.7 million,  or
17%, in fiscal 2000 over fiscal  1999,  primarily  as a result of the  increased
number of stores open during the period.  Average  store  expense  increased  by
approximately  $1,200 per store in fiscal 2000 as compared to fiscal 1999. Store
expenses  increased  as a  percentage  of revenues  from 66.2% in fiscal 1999 to
67.3% in fiscal 2000,  principally  as a result of a slight  decrease in average
revenue per store. Salaries and benefits expenses,  occupancy costs, and armored
and security expenses combined  increased $9.8 million,  or 18%,  primarily as a
result of the increased number of stores in operation.  Returned checks,  net of
collections, and cash shortages increased $0.2 million, or 2%, in fiscal 2000 as
compared  to  fiscal  1999,  due  also to the  increased  number  of  stores  in
operation.  Returned checks, net of collections, and cash shortages decreased as
a percentage of revenues  from 7.3% in fiscal 1999 to 6.4% in fiscal 2000.  Loan
losses  increased $1.4 million in fiscal 2000 over fiscal 1999, due primarily to
the increased loan volume resulting from the broader  availability of the Goleta
National Bank loan product.  Loan losses  increased as a percentage of loan fees
and interest revenue from 20% in fiscal 1999 to 23% in fiscal 2000. Depreciation
expense increased $0.7 million, or 15%, due to the increased number of stores in
operation  during fiscal 2000 as compared to fiscal 1999.  Other store  expenses
increased $1.7 million, or 19%, as a result of the increased number of stores in
operation and the expensing of new store  start-up  costs which were  previously
capitalized.
<PAGE>

FISCAL 1999 COMPARED TO FISCAL 1998. Store expenses increased $13.8 million,  or
21%, in fiscal 1999 over fiscal  1998,  primarily  as a result of the  increased
number of stores open during the period.  Average  store  expense  increased  by
approximately  $6,000 per store in fiscal 1999 as compared to fiscal 1998. Store
expenses  decreased  as a  percentage  of revenues  from 67.0% in fiscal 1998 to
66.2% in  fiscal  1999,  principally  as a result  of the  increase  in  average
revenues per store. Salaries and benefits expenses, occupancy costs, and armored
and security expenses combined  increased $8.6 million,  or 18%,  primarily as a
result of the increased number of stores in operation.  Returned checks,  net of
collections,  and cash shortages  increased $2.8 million, or 46%, in fiscal 1999
as compared to fiscal 1998,  due to the increased  number of stores in operation
during  fiscal  1999  as  compared  to  fiscal  1998.  Returned  checks,  net of
collections,  and cash shortages increased as a percentage of revenues from 6.0%
in fiscal 1998 to 7.3% in fiscal  1999.  Loan losses  increased  $1.0 million in
fiscal 1999 over fiscal 1998, due primarily to the increased  loan volume.  Loan
losses  increased as a percentage of loan fees and interest  revenue from 18% in
fiscal 1998 to 20% in fiscal 1999.  Depreciation expense increased $0.6 million,
or 16%, due to the increased number of stores in operation during fiscal 1999 as
compared to fiscal 1998.  Other store expenses  increased $0.8 million,  or 11%,
but  decreased as a percentage  of revenue from 7.8% for fiscal 1998 compared to
7.0% of fiscal 1999.
<TABLE>
<CAPTION>

OTHER EXPENSE ANALYSIS                                                   YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------------------------------------------------------
                                                      (in thousands)                        (percentage of revenue)
                                            2000         1999           1998            2000           1999          1998
                                         -----------  ------------  -------------   --------------  -----------   -----------

<S>                                        <C>            <C>            <C>            <C>           <C>           <C>
Region expenses                            $ 11,119       $ 9,369        $ 8,353        7.9%          7.7%          8.3%
Headquarters expenses                         8,247         7,673          7,198         5.9           6.3           7.2
Franchise expenses                            1,063         1,288            965         0.8           1.1           1.0
Other depreciation and amortization           3,798         4,236          3,502         2.7           3.5           3.5
Interest expense, net                         6,123         4,476          2,437         4.4           3.7           2.4
Other expenses                                  955           689             49         0.7           0.1           0.0

</TABLE>

REGION EXPENSES

FISCAL 2000 COMPARED TO FISCAL 1999. Region expenses increased $1.8 million,  or
19%, in fiscal 2000 over fiscal 1999. The increase is primarily due to increased
field  salaries and benefits,  advertising  and marketing  materials for the new
loan product,  and additional  personnel for collections related to the new loan
product.  Region  expenses as a percentage of revenues  increased  slightly from
7.7% for fiscal 1999 to 7.9% for fiscal 2000.

FISCAL 1999 COMPARED TO FISCAL 1998. Region expenses increased $1.0 million,  or
12%, in fiscal 1999 over fiscal 1998. The increase is primarily due to increased
salaries and benefits and travel expenses and the opening of a new region office
during the third  quarter of fiscal 1999.  Region  expenses as a  percentage  of
revenues decreased from 8.3% for fiscal 1998 to 7.7% for fiscal 1999.

HEADQUARTERS EXPENSES

FISCAL 2000  COMPARED  TO FISCAL  1999.  Headquarters  expenses  increased  $0.6
million,  or 8%, in fiscal 2000 over fiscal 1999.  The increase is the result of
additional salaries and benefits expenses,  primarily related to merit increases
and  additional  personnel.  Headquarters  expenses as a  percentage  of revenue
decreased from 6.3% in fiscal 1999 to 5.9% in fiscal 2000.

FISCAL 1999  COMPARED  TO FISCAL  1998.  Headquarters  expenses  increased  $0.5
million,  or 7%, in fiscal 1999 over fiscal 1998.  The increase is the result of
additional salaries and benefits expenses, primarily related to merit increases.
Headquarters  expenses as a percentage of revenue  decreased from 7.2% in fiscal
1998 to 6.3% in fiscal 1999.

<PAGE>

FRANCHISE EXPENSES

FISCAL 2000 COMPARED TO FISCAL 1999.  Franchise expenses relate to the salaries,
benefits, and other franchisee support costs for the sales and support personnel
in the ACE  Franchise  Group.  Franchise  expenses  decreased  $0.2 million from
fiscal  1999 to fiscal  2000,  primarily  due to a reduction  in legal  expenses
during fiscal 2000 related to the Company's franchise program. Franchise expense
as a  percentage  of revenue  decreased  to 0.8% for  fiscal  2000 from 1.1% for
fiscal 1999.

FISCAL 1999 COMPARED TO FISCAL 1998.  Franchise expenses relate to the salaries,
benefits, and other franchisee support costs for the sales and support personnel
in the ACE  Franchise  Group.  Franchise  expenses  increased  $0.3 million from
fiscal 1998 to fiscal 1999,  primarily due to increased  legal  expenses  during
fiscal 1999 related to the Company's  franchise program.  Franchise expense as a
percentage  of revenue  increased  to 1.1% for fiscal  1999 from 1.0% for fiscal
1998.

OTHER DEPRECIATION AND AMORTIZATION

FISCAL  2000  COMPARED  TO FISCAL  1999.  Other  depreciation  and  amortization
decreased $0.4 million, or 10%, for fiscal 2000 as compared to fiscal 1999. This
decrease was attributable to the change in accounting  principle  adopted in the
first  quarter of fiscal  2000  requiring  start-up  costs to be fully  expensed
instead  of  capitalized,   partially  offset  by  amortization  of  intangibles
(goodwill and non-competition  agreements) resulting from the 36 stores acquired
during  fiscal  2000 and the 16 stores  acquired  during the last half of fiscal
1999, along with the depreciation expense resulting from the 99 stores opened in
fiscal 2000 and the 52 stores opened in the last half of fiscal 1999.

FISCAL  1999  COMPARED  TO FISCAL  1998.  Other  depreciation  and  amortization
increased $0.7 million, or 21%, for fiscal 1999 as compared to fiscal 1998. This
increase  was   attributable  to  amortization  of  intangibles   (goodwill  and
non-competition  agreements) resulting from the 35 stores acquired during fiscal
1999 and the eight  stores  acquired  during the last half of fiscal  1998.  The
increase was also  attributable  to depreciation  expense  resulting from the 99
stores opened in fiscal 1999 and the 35 stores opened in the last half of fiscal
1998.

INTEREST EXPENSE

FISCAL 2000 COMPARED TO FISCAL 1999.  Interest expense,  net of interest income,
increased $1.6 million,  or 37%, in fiscal 2000 as compared to fiscal 1999. This
increase was  principally  the result of increased  borrowings  to finance store
openings and acquisitions.

FISCAL 1999 COMPARED TO FISCAL 1998.  Interest expense,  net of interest income,
increased $2.0 million,  or 84%, in fiscal 1999 as compared to fiscal 1998. This
increase was principally the result of an increase in borrowings used to finance
store  acquisitions and borrowings  required to replace the deferred money order
remittances used by the Company under its previous money order agreement,  which
was replaced in mid-December 1998.

INCOME TAXES

FISCAL 2000  COMPARED TO FISCAL  1999.  A total of $5.8 million was provided for
income  taxes for fiscal 2000 as compared to $5.4  million in fiscal  1999.  The
provisions  for income  taxes were  calculated  based on the  statutory  federal
income  tax  rate  of  34%,   plus  a  provision  for  state  income  taxes  and
non-deductible  goodwill resulting from  acquisitions.  The effective income tax
rate was 39.5% for fiscal years 2000 and 1999.

FISCAL 1999  COMPARED TO FISCAL  1998.  A total of $5.4 million was provided for
income  taxes for fiscal 1999 as compared to $4.2  million in fiscal  1998.  The
provisions  for income  taxes were  calculated  based on the  statutory  federal
income  tax  rate  of  34%,   plus  a  provision  for  state  income  taxes  and
non-deductible  goodwill resulting from  acquisitions.  The effective income tax
rate was 39.5% for fiscal years 1999 and 1998.

<PAGE>
CUMULATIVE EFFECT OF ACCOUNTING CHANGE

Effective July 1, 1999, the Company adopted the new accounting  standard,  AICPA
Statement  of Position  98-5,  Reporting  on the Costs of Start-up  Activities,"
resulting in a cumulative  effect on net income of $0.6 million net of an income
tax benefit of $0.4 million.

BALANCE SHEET VARIATIONS

Cash and cash equivalents,  the money order principal payable, and the revolving
advances  vary  because  of  seasonal  and  day-to-day   requirements  resulting
primarily  from  maintaining  cash for cashing  checks and making small consumer
loans,  receipts  of cash  from the  sale of  money  orders,  loan  volume,  and
remittances on money orders sold. For the fiscal year ended June 30, 2000,  cash
and cash  equivalents  increased  $46.2 million,  compared to a decrease of $0.8
million for the year ended June 30, 1999 primarily due to higher borrowings from
the revolving line of credit.  This was a result of the higher cash requirements
due to the year-end  business  day being Friday in fiscal year 2000  compared to
Wednesday for fiscal year 1999.

Accounts  receivable  increased $1.8 million primarily due to higher receivables
from MoneyGram for commissions  and bonuses  related to the increased  number of
Company-owned stores.

Loans  receivable  increased  $13.2  million as a result of the  offering of the
Goleta National Bank loan product at many more Company-owned stores, as compared
to the Company "payday loan" product or service.

Other current assets  remained  relatively  unchanged from June 30, 1999 to June
30, 2000.

Property and equipment,  net increased $6.5 million,  and the excess of purchase
price over the fair value of net assets  acquired,  net increased  $9.3 million,
during the fiscal year ended June 30, 2000,  as a result of the 99 stores opened
and the 36 stores  acquired during fiscal 2000,  offset by related  depreciation
and amortization.

The Company paid the first annual $4.0 million  installment  of principal of its
senior secured notes in November 1999.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows from Operating Activities

During  fiscal  2000,  1999,  and 1998,  the  Company  had net cash  provided by
operating  activities  of  $6.7  million,  $17.1  million,  and  $14.2  million,
respectively. The decrease from fiscal 1999 of $10.4 million is due primarily to
the cash required to support the Goleta Loan product.

During fiscal 2000,  1999, and 1998, the Company  recognized $3.5 million,  $2.2
million,  and $1.5  million in  deferred  revenue,  respectively.  The  Existing
MoneyGram  Agreement  provides  incentive  bonuses for opening new  locations at
which  MoneyGram  services  are  offered  as well as certain  other  performance
incentives.  The  bonus of $2  million  received  in June  1996  and  additional
incentive  bonuses  are  recognized  as  revenue  over the term of the  Existing
MoneyGram Agreement.  Additionally, in fiscal 1999 the Company began recognizing
deferred  revenue related to incentives  received from Travelers  Express.  (See
"Business - Relationships with the Money Order and MoneyGram Suppliers.")

Cash Flows from Investing Activities

During  fiscal  2000,  1999,  and 1998,  the Company used $12.3  million,  $10.1
million, and $5.7 million, respectively, for purchases of property and equipment
related  principally  to new store  openings  and  remodeling  existing  stores.
Capital  expenditures  related to acquisitions,  including  related  liabilities
incurred,  amounted to $11.4  million,  $8.4  million,  and $4.7 million for the
fiscal years ended June 30, 2000, 1999, and 1998, respectively.
<PAGE>

The Company's total budgeted capital expenditures,  excluding acquisitions,  are
currently  anticipated to be  approximately  $8.6 million during its fiscal year
ending June 30,  2001,  in  connection  with the  opening of 50 new stores,  the
relocation  or  remodeling  of certain  existing  stores,  and  computer  system
upgrades.  The actual amount of capital  expenditures will depend in part on the
number of new stores opened,  the number of stores  acquired,  and the number of
existing stores that are relocated or remodeled.  The Company  believes that its
existing  resources,   anticipated  cash  flows  from  operations,   and  credit
facilities  will be sufficient to finance its planned  expansion and  operations
during  fiscal  2001.  Although  management  anticipates  that the Company  will
continue to expand, there can be no assurance that the Company's expansion plans
will not be adversely affected by competition,  market conditions, or changes in
laws or government regulations affecting check cashing and related businesses of
the types conducted by the Company.

During fiscal 2000, the Company invested $1.0 million in ePacific  Incorporated,
a private  company in the business of providing  customized  debit-card  payment
systems and  electronic  funds  transfer  processing  services.  See "Business -
Investment in ePacific."

Cash Flows from Financing Activities

During  fiscal  2000,  1999,  and 1998,  the  Company  had net cash  provided by
financing  activities  of  $64.1  million,   $0.6  million,  and  $0.9  million,
respectively.  During the year ended June 30, 2000,  the Company  borrowed,  net
$54.9  million  of  revolving  line-of  credit,  borrowed  $8.0  million of term
advances,  borrowed, net $5.1 million from the money order supplier, repaid $4.0
million of long-term  notes payable,  purchased $2.4 million of treasury  stock,
and received $1.0 million from the exercise of stock options.

Money Order Agreement

In April  1998,  the  Company  signed a money  order  agreement  with  Travelers
Express,  which became  effective  December 17, 1998. In  conjunction  with this
agreement  and the  MoneyLine  Agreement,  the Company  received $3 million from
Travelers  Express in April  1998,  received  $400,000 in each of April 1999 and
April 2000,  and is entitled to receive an additional  $400,000 per year for the
next three  years.  The $3 million  payment was  deferred  and included in other
liabilities  in the  consolidated  balance  sheets.  The total $5  million  from
Travelers Express is being amortized on a straight-line basis over the five-year
term of the agreements beginning January 1999.

Credit Facilities

In July 1998, the Company entered into the Credit  Agreement with the Lenders (a
syndicate of banks)  represented  by Wells Fargo Bank and that Credit  Agreement
was renewed in December  1999.  The credit  facilities  available to the Company
under the Credit  Agreement are the  Revolving  Facility of $130 million and the
Term-Loan Facility of $35 million. Also, upon certain conditions, in addition to
the Revolving  Facility,  the Company has available from Wells Fargo Bank (a) an
additional  25-day  revolving  advance  facility  of up to $25 million and (b) a
stand-by letter-of-credit facility of up to $1.5 million. The Revolving Facility
replaced the deferred money order  remittances  and  revolving-advance  facility
formerly used by the Company under the previous money order  agreement,  and the
Term-Loan  Facility  replaced the term advance facility under the previous money
order agreement. Borrowings under the Revolving Facility may be used for working
capital and general  corporate  purposes,  and  borrowings  under the  Term-Loan
Facility may be used for store  construction  and  relocation  and other capital
expenditures,  including  acquisitions,  and refinancing other debt. The Company
first borrowed  under the Credit  Agreement on December 16, 1998, and discharged
all of the Company's  obligations to the previous money order supplier under the
previous money order agreement. The Company has borrowed $95.0 million under the
Revolving Facility and $18.5 million under the Term-Loan Facility as of June 30,
2000.

The Revolving  Facility is available to the Company until December 13, 2000, and
unless renewed,  all unpaid  principal and accrued  interest under the Revolving
Facility  will then be due.  The  Term-Loan  Facility  will be  available to the
Company until December 13, 2000,  unless  renewed,  and all amounts  outstanding
under the  Term-Loan  Facility at that date will be payable over the  succeeding
four  years;   principal  will  be  payable   quarterly  based  on  a  four-year
straight-line  amortization.   The  Company's  borrowings  under  the  Revolving
Facility  bear  interest at a variable  annual  rate equal to, at the  Company's
discretion,  either the prime rate publicly announced by Wells Fargo Bank or the
London InterBank Offered Rate (LIBOR) plus 0.75%. The Company's borrowings under

<PAGE>
the Term-Loan  Facility bear interest at a variable annual rate equal to, at the
Company's  discretion,  either the prime rate publicly  announced by Wells Fargo
Bank plus 0.25% or LIBOR plus 1.75%.  Interest  is  generally  payable  monthly,
except on  LIBOR-rate  borrowings;  interest on  LIBOR-rate  borrowings  will be
payable  every 30,  60, or 90 days,  depending  on the  period  selected  by the
Company. Under the Credit Agreement,  the Company must also pay a commitment fee
equal to 0.2% of the unused  portion of the Revolving  Facility and 0.45% of the
unused portion of the Term-Loan Facility. The Credit Agreement also provides for
the  Company's  prepayment  to the  Lenders  of  certain  amounts  due under the
Term-Loan  Facility upon certain  events,  including (i) the sale of assets from
which the  Company has  received  net  proceeds of at least $5 million  during a
fiscal year,  (ii) the Company's  issuance of equity  securities,  and (iii) the
Company's  having  excess cash flow, as defined in the Credit  Agreement,  for a
fiscal year.

The short-term  availability of the credit facilities under the Credit Agreement
permitted  the  Company  to obtain a lower  interest  rate and other  terms more
favorable than longer-term facilities,  and the Company expects those facilities
to be renewed at the expiration of their currently  effective period.  There can
be no assurance, however, that the anticipated renewal will be effected. If such
renewal is not effected,  the Company will have to obtain  financing  from other
sources, and that financing might be on terms less favorable to the Company than
those set forth in the Credit Agreement. The Company believes that other sources
of financing would be available to it if necessary; however, if the Company were
unable  to  obtain  financing  from one or more  other  sources,  the  Company's
liquidity and operations would be materially and adversely affected.

The Credit Agreement may be terminated  before the stated expiration or maturity
dates of the  Revolving  Facility  and the  Term-Loan  Facility - requiring  all
unpaid principal and accrued interest to be paid to the Lenders - upon any Event
of Default as defined in the Credit  Agreement.  The Events of Default  include:
(a)  nonpayment  of amounts due to the Lenders under the Credit  Agreement,  (b)
failure to observe or perform  covenants set forth in the Credit  Agreement that
are not  cured,  (c) a change in  control  of the  Company,  and (d) an event or
circumstance  that has a  material  adverse  effect on the  Company's  business,
operations, financial condition, or prospects.

The  Company is subject to various  restrictive  covenants  stated in the Credit
Agreement.  These covenants, which are typical of those found in loan agreements
of that kind, include  restrictions on the incurrence of indebtedness from other
sources,  restrictions  on  advances  to or  investments  in  other  persons  or
entities, restrictions on significant acquisitions,  restrictions on the payment
of dividends to  shareholders  or the repurchase of shares,  and the requirement
that  various  financial  ratios be  maintained.  The Company has  received  the
consent of the Lenders to implement the stock repurchase program described below
under "- Stock Repurchase Program."

The  Company's  payment  and  performance  of its  obligations  under the Credit
Agreement  and ancillary  documents are secured by liens on all its assets.  The
collateral arrangements are subject to the Amended and Restated Collateral Trust
Agreement dated as of July 31, 1998 (the "Amended  Collateral Trust  Agreement")
that  was  signed  with the  Credit  Agreement.  The  Amended  Collateral  Trust
Agreement  amended and superseded the Original  Collateral Trust Agreement.  See
"Business - Arrangement  Regarding Secured Notes." The Amended  Collateral Trust
Agreement  created a collateral trust, with Wilmington Trust Company as trustee,
to secure  the  Company's  obligations  under the  Credit  Agreement  and to the
Company's  two other secured  lenders,  Principal  and  Travelers  Express.  The
Amended Collateral Trust Agreement includes agreements regarding the priority of
distributions  to the secured  lenders upon  foreclosure  and liquidation of the
collateral subject thereto and certain other intercreditor arrangements.

To reduce its risk of greater  interest expense upon a rise in the prime rate or
LIBOR,  the Company has entered into three  interest-rate  swap  agreements with
Bank of  America.  Those  agreements  effectively  converted  a  portion  of the
Company's floating-rate interest obligations to fixed-rate interest obligations.
With respect to the revolving line-of-credit facility, the first notional amount
is $33 million for a two-year  period that began January 4, 1999, and the second
notional amount is $10 million for a  sixteen-month  period that began September
3, 1999.  The third  notional  amount under the term-loan  facility is currently
$9.0 million,  with decreases in calendar year 2000.  The notional  amounts were
determined based on the Company's minimum  projected  borrowings during calendar
years 1999 and 2000.  The fixed rate  applicable  to the notional  amount of $33
million under the revolving  line-of-credit facility was 5.14% for calendar year
1999 and is 5.23% for  calendar  year  2000.  The fixed rate  applicable  to the
notional  amount of $10 million under the revolving  line-of-credit  facility is
6.00% for  calendar  year  1999 and for  calendar  year  2000.  The  fixed  rate
applicable to the notional  amount of $9.0 million under the term-loan  facility
was 6.23% for calendar year 1999 and is 6.38% for calendar year 2000.
<PAGE>

Stock Repurchase Program

In August 1999, the Company's Board of Directors  authorized the repurchase from
time to time of up to  approximately $4 million of the Company's Common Stock in
the open market or in  negotiated  transactions.  In August 2000,  the Company's
Board of Directors  authorized the repurchase of an additional $1 million of the
Company's  Common  Stock.  This stock  repurchase  program will remain in effect
unless discontinued by the Board of Directors.  As of June 30, 2000, the Company
had repurchased 181,400 shares at an average price of $13.25 per share.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company has adopted  Statement of Financial  Accounting  Standards  No. 131,
"Disclosures  about Segments of an Enterprise and Related  Information," for its
fiscal year ending June 30, 1999.  This standard  requires the Company to report
financial and descriptive  information about its reportable  operating segments.
The Company  considers  its franchise  operations  to be a reportable  operating
segment and has included  appropriate  disclosures in its notes to the financial
statements for the years ended June 30, 2000 and 1999.

As required,  effective  July 1, 1999,  the Company  adopted the new  accounting
standard,  AICPA Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities," which requires that the previously capitalized start-up costs to be
recognized as a cumulative effect of change in accounting principle and expensed
fully in the quarter. This resulted in a cumulative effect on net income of $0.6
million net of an income tax benefit of $0.4 million.

The  Company  is also  required  to  adopt  Statement  of  Financial  Accounting
Standards  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities,"  by its first  quarter  ending  September  30, 2000.  This standard
requires  the Company to record the fair value of its  interest-rate  swap as an
asset or liability in the consolidated  balance sheet. Changes in the fair value
of the  interest-rate  swap will be  reported as a  component  of  shareholders'
equity  in the  consolidated  balance  sheet.  The fair  value of the  Company's
existing interest-rate swap is $0.6 million as of June 30, 2000.

OPERATING TRENDS

SEASONALITY

The  Company's  business  is seasonal to the extent of the impact of cashing tax
refund checks.  The impact of these services is in the third and fourth quarters
of the Company's fiscal year.

IMPACT OF INFLATION

Management  believes that the Company's  results of operations are not dependent
upon the levels of inflation.
<PAGE>

FORWARD-LOOKING STATEMENTS

This  Report  contains,  and from time to time the  Company  or  certain  of its
representatives  may make,  "forward-looking  statements"  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange Act of 1934,  as amended.  These  statements  are generally
identified  by the use of  words  such as  "anticipate,"  "expect,"  "estimate,"
"believe,"  "intend,"  and terms with  similar  meanings.  Although  the Company
believes   that  the  current   views  and   expectations   reflected  in  these
forward-looking statements are reasonable, those views and expectations, and the
related statements,  are inherently subject to risks,  uncertainties,  and other
factors,  many of which are not under the Company's  control and may not even be
predictable.  Those  risks,  uncertainties,  and other  factors  could cause the
actual  results  to  differ   materially  from  these  in  the   forward-looking
statements. Those risks, uncertainties, and factors include, but are not limited
to, many of the matters  described in this Report:  the Company's  relationships
with Travelers  Express and its affiliates,  with Goleta National Bank, and with
the Lenders;  governmental  regulation  of  check-cashing,  short-term  consumer
lending, and related financial services  businesses;  theft and employee errors;
the  availability of suitable  locations,  acquisition  opportunities,  adequate
financing,  and  experienced  management  employees to implement  the  Company's
growth strategy; the fragmentation of the check-cashing industry and competition
from  various  other  sources,  such as banks,  savings  and  loans,  short-term
consumer lenders,  and other similar  financial  services  entities,  as well as
retail  businesses that offer products and services offered by the Company;  and
customer  demand and response to products  and services  offered by the Company.
The Company expressly  disclaims any obligations to release publicly any updates
or revisions to these  forward-looking  statements  to reflect any change in its
views or expectations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to financial market risks, particularly including changes
in interest rates that might affect the costs of its financing  under the Credit
Agreement.  To  mitigate  the risks of changes in  interest  rates,  the Company
utilizes derivative financial  instruments.  The Company does not use derivative
financial instruments for speculative or trading purposes.

To reduce its risk of greater  interest expense upon a rise in the prime rate or
LIBOR,  the Company has entered into three  interest-rate  swap  agreements with
Bank of  America.  Those  agreements  effectively  converted  a  portion  of the
Company's floating-rate interest obligations to fixed-rate interest obligations.
With respect to the revolving line-of-credit facility, the first notional amount
is $33 million for a two-year  period that began January 4, 1999, and the second
notional amount is $10 million for a  sixteen-month  period that began September
3, 1999.  The third  notional  amount under the term-loan  facility is currently
$9.0 million,  with decreases in calendar year 2000.  The notional  amounts were
determined based on the Company's minimum  projected  borrowings during calendar
years 1999 and 2000.  The fixed rate  applicable  to the notional  amount of $33
million under the revolving  line-of-credit facility was 5.14% for calendar year
1999 and is 5.23% for  calendar  year  2000.  The fixed rate  applicable  to the
notional amount of $10 million under the revolving  line-of-credit  facility was
6.00% for calendar  year 1999 and is 6% for calendar  year 2000.  The fixed rate
applicable to the notional  amount of $9.0 million under the term-loan  facility
was 6.23% for calendar year 1999 and is 6.38% for calendar year 2000.

The fair value of the Company's existing  interest-rate swaps is $0.6 million as
of June 30, 2000. Based on the average outstanding  indebtedness in the previous
quarter,  a 10% change in  interest  rates  would  have  changed  the  Company's
interest expense by approximately $490,000 (pre-tax) for the year ended June 30,
2000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   See Part IV, Item 14(a) 1 for information required for this item.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

   Not Applicable.


<PAGE>

                                    PART III

   The  information  called for in Part III of this Form 10-K is incorporated by
reference  from the Company's  definitive  proxy  statement to be filed with the
Securities  and Exchange  Commission  pursuant to Regulation  14A not later than
October 28, 2000 (120 days after the Company's fiscal year).

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) The following documents are filed as part of this report:
<TABLE>
<CAPTION>

1. Financial Statements.
------------------------

<S>                                                                                                       <C>
Report of independent public accountants ............................................................     38
Consolidated balance sheets as of June 30, 2000 and 1999.............................................     39
Consolidated statements of earnings for the years ended June 30, 2000, 1999, and 1998 ...............     40
Consolidated statements of shareholders' equity for the years ended June 30, 2000, 1999, and 1998....     41
Consolidated statements of cash flows for the years ended June 30, 2000, 1999, and 1998 .............     42
Notes to consolidated financial statements ..........................................................     43
</TABLE>
2. Financial Statement Schedules.
---------------------------------


    All  schedules  have  been  omitted  as  inapplicable  or  because  the
information required to be included therein is shown in the Financial Statements
or Notes to Consolidated Financial Statements.

3. Exhibits.
------------


Exhibit Number                             Exhibits
--------------                             --------

3.1      Restated  Articles of Incorporation of the Company,  as amended through
         January 31, 1998.  (Included as Exhibit 3.6 to the Company's  Form 10-Q
         as  of  December  31,  1997   (Commission   File  Number  0-20774)  and
         incorporated herein by reference.)

3.2      Amended and Restated Bylaws of the Company,  as amended through January
         31,  1998.  (Included as Exhibit 3.7 to the  Company's  Form 10-Q as of
         December 31, 1997  (Commission  File Number  0-20774) and  incorporated
         herein by reference.)

3.3      Certificate of Amendment to the Company's Bylaws dated January 3, 2000.
         (Included as Exhibit 3.3 to the Company's  Form 10-Q as of December 31,
         1999  (Commission  File  Number  0-20774)  and  incorporated  herein by
         reference.)

4.1      Form of Certificate  representing  shares of Registrant's Common Stock.
         (Included  as Exhibit 4.1 to the  Company's  Registration  Statement on
         Form  S-1  (Reg.  No.  33-53286)  (the  "Registration  Statement")  and
         incorporated herein by reference.)

10.1     Ace Cash Express,  Inc.  1987 Stock Option Plan, as amended  (including
         form of Incentive Stock Option Agreement). (Included as Exhibit 10.1 to
         the Registration Statement and incorporated herein by reference.)#

10.2     1992  Master  Agreement  dated  October  14,  1992  (the  "Money  Order
         Agreement")  between the Company and American  Express  Travel  Related
         Services  Company,  Inc.  (the "Money Order  Supplier").  (Confidential
         treatment  for a  portion  of this  document  has been  granted  by the
         Securities  and  Exchange  Commission  pursuant to Rule 24b-2 under the
         Securities  Exchange  Act of 1934)  (Included  as  Exhibit  10.4 to the
         Registration Statement and incorporated herein by reference.)
<PAGE>
10.3     Agreement  Regarding  Stock  Pledges  dated as of  November  20,  1992,
         between  the  Company and the  shareholders  pledging  shares of Common
         Stock to secure the performance of the Company's  obligations under the
         Money Order  Agreement.  (Included as Exhibit 10.7 to the  Registration
         Statement and incorporated herein by reference.)

10.4     Lease Agreement dated October 1, 1987, between the Company and Greenway
         Tower Joint Venture,  as amended by First  Amendment to Lease Agreement
         dated April 29, 1988,  Second Amendment to Lease Agreement dated August
         24, 1988,  Third  Amendment to Lease  Agreement dated December 29, 1988
         and  Fourth  Amendment  to Lease  Agreement  dated  January  29,  1991.
         (Included  as  Exhibit   10.8  to  the   Registration   Statement   and
         incorporated herein by reference.)

10.5     First  Amendment to the Money Order  Agreement  dated December  1,1992,
         between the Company and the Money Order Supplier.  (Included as Exhibit
         10.9  to  the  Registration   Statement  and  incorporated   herein  by
         reference.)

10.6     Agreement  for Purchase and Sale of Stock Assets dated January 2, 1992,
         between T.J. Martin ("Martin") and R.C. Hemmig ("Hemmig"). (Included as
         Exhibit 10.10 to the Registration  Statement and incorporated herein by
         reference.)

10.7     Option to  Repurchase,  dated  January  2,  1992,  in favor of  Hemmig.
         (Included  as  Exhibit   10.12  to  the   Registration   Statement  and
         incorporated herein by reference.)

10.8     Irrevocable  Proxy of Martin dated  January 2, 1992 in favor of Hemmig.
         (Included  as  Exhibit   10.13  to  the   Registration   Statement  and
         incorporated by reference herein.)

10.9     Letter  Agreement  between First Data Corporation and the Company dated
         December  6, 1993,  amending  the First  Amendment  to the Money  Order
         Agreement.  (Included as Exhibit 10.9 to the Company's  Form 10-K as of
         June 30, 1994 (Commission File Number 0-20774) and incorporated  herein
         by reference.)

10.10    Fifth  Amendment to Lease  Agreement  dated June 13, 1994,  between the
         Company and Greenway Tower Joint Venture. (Included as Exhibit 10.10 to
         the  Company's  Form 10-K as of June 30, 1994  (Commission  File Number
         0-20774) and incorporated herein by reference.)

10.11    Asset Purchase  Agreement  dated November 22, 1993,  among the Company,
         sole proprietor,  limited  partnership,  and general  partnerships that
         conduct  business  under  the  name  "Mr.  Money  Check  Cashers"  (the
         "Sellers"),  general partners of the partnership  sellers (the "General
         Partners"),  and an  individual  agent for the  Sellers and the General
         Partners (the "Agent").  (Included as Exhibit 2.1 in the Company's Form
         8-K filed on December 7, 1993  (Commission  File  Number  0-20774)  and
         incorporated herein by reference.)

10.12    Food Stamp Sub-Contract  Agreement dated November 22, 1993, between the
         Company and the Agent.  (Included as Exhibit 2.2 to the Company's  Form
         8-K filed on  December  7,1993  (Commission  File Number  0-20774)  and
         incorporated herein by reference.)

10.13    Ace Cash  Express,  Inc.  401(k) Profit  Sharing Plan,  adopted July 1,
         1994.  (Included as Exhibit 10.13 to the Company's Form 10-K as of June
         30, 1994 (Commission  File Number 0-20774) and  incorporated  herein by
         reference.)#

10.14    Ace Cash Express,  Inc.  Deferred  Compensation  Plan,  adopted July 1,
         1994.  (Included as Exhibit 10.14 to the Company's Form 10-K as of June
         30, 1994 (Commission  File Number 0-20774) and  incorporated  herein by
         reference.)#

10.15    Asset  Purchase  Agreement  dated June 27, 1995,  among the Company and
         Quick Cash,  Inc., Q.C. & G. Financial,  Inc.,  David  Christenholz and
         Gloria Guerra-Leyva. (Included as Exhibit 2.1 to the Company's Form 8-K
         filed  on  July  11,  1995   (Commission   File  Number   0-20774)  and
         incorporated herein by reference.)

10.16    Escrow  Agreement dated June 27, 1995,  among the Company,  Quick Cash,
         Inc.,  Q.C.  &  G.  Financial,   Inc.,   David   Christenholz,   Gloria
         Guerra-Leyva,  and Bank One, Arizona, NA, as escrow agent. (Included as
         Exhibit 2.2 to the Company's  Form 8-K filed July 11, 1995  (Commission
         File Number 0-20774) and incorporated herein by reference.)
<PAGE>
10.17    Promissory  Note dated June 27, 1995, of the Registrant in favor of the
         Money Order  Supplier.  (Included as Exhibit 2.3 to Form 8-K filed July
         11, 1995 and incorporated herein by reference.)

10.18    Second  Amendment to the Money Order Agreement dated September 8, 1995,
         between the Company and the Money Order Supplier.  (Included as Exhibit
         10.18 to the Company's Form 10-K as of June 30, 1995  (Commission  File
         Number 0-20774) and incorporated herein by reference.)

10.19    Ace Cash Express, Inc.  Non-Employee  Directors Stock Option Plan dated
         March 27, 1995.  (Included as Exhibit 10.19 to the Company's  Form 10-K
         as June 30, 1995  (Commission  File Number  0-20774)  and  incorporated
         herein by reference.)

10.20    Letter  Agreement dated July 13, 1995,  between First Data  Corporation
         and the  Company  amending  the Money  Order  Agreement.  (Included  as
         Exhibit  10.20  to  the  Company's  Form  10-K  as  of  June  30,  1995
         (Commission File Number 0-20774) and incorporated herein by reference.)

10.21    Letter  Agreement  dated February 1, 1996,  between the Company and the
         Money Order Supplier  amending the Money Order Agreement.  (Included as
         Exhibit  10.21 to the  Company's  Form  10-Q as of  December  31,  1995
         (Commission File Number 0-20774) and incorporated herein by reference.)

10.22    1996 MoneyGram  Master  Agreement  dated February 1, 1996,  between the
         Company  and the Money  Order  Supplier  (the  "MoneyGram  Agreement").
         (Included as Exhibit  10.22 to the  Company's  Form 10-Q as of December
         31, 1995 (Commission  File Number 0-20774) and  incorporated  herein by
         reference.)

10.23    Agreement and Plan of Merger dated October 13, 1995, among the Company,
         Check Express,  Inc.,  and Ace  Acquisition  Corporation.  (Included as
         Exhibit  2.1 to the  Company's  Form  8-K  filed  on  February  16,1996
         (Commission File Number 0-20774) and incorporated herein by reference.)

10.24    Amendment (to  Agreement  and Plan of Merger) dated  December 20, 1995,
         among  the  Company,   Check  Express,   Inc.,   and  Ace   Acquisition
         Corporation.  (Included as Exhibit 2.2 to the Company's  Form 8-K filed
         on February 16, 1996  (Commission File Number 0-20774) and incorporated
         herein by reference.)

10.25    Sixth Amendment to Lease Agreement dated February 1, 1996,  between the
         Company and Greenway Tower Joint Venture. (Included as Exhibit 10.25 to
         the Company's  Form 10-Q as of March 31, 1996  (Commission  File Number
         0-20774) and incorporated herein by reference.)

10.26    1996-A  Amendment  to the  MoneyGram  Agreement  dated March 21,  1996,
         between the Company and the Money Order Supplier.  (Included as Exhibit
         10.26 to the Company's Form 10-K as of June 30, 1996  (Commission  File
         Number 0-20774) and incorporated herein by reference.)

10.27    1996-B  Amendment  to the  MoneyGram  Agreement  dated  June 27,  1996,
         between the Company and the Money Order Supplier.  (Included as Exhibit
         10.27 to the Company's Form 10-K as of June 30, 1996  (Commission  file
         Number 0-20774) and incorporated herein by reference.)

10.28    Note Purchase  Agreement  dated November 15, 1996,  between the Company
         and Principal Life Insurance Company. (Included as Exhibit 10.28 to the
         Company's  Form 10-Q as of December  31, 1996  (Commission  File Number
         0-20774) and incorporated herein by reference.)

10.29    Form of 9.03% Senior Secured Notes due November 15, 2003.  (Included as
         Exhibit  10.29 to the  Company's  Form  10-Q as of  December  31,  1996
         (Commission File Number 0-20774) and incorporated herein by reference.)

10.30    Collateral  Trust Agreement dated November 15, 1996,  among the Company
         and the Money Order  Supplier,  Principal Life Insurance  Company,  and
         Wilmington  Trust Company.  (Included as Exhibit 10.30 to the Company's
         Form 10-Q as of December 31, 1996  (Commission File Number 0-20774) and
         incorporated herein by reference.)

10.31    Assignment of Deposit  Accounts and Security  Agreement  dated November
         15, 1996,  between the Company and Wilmington Trust Company.  (Included
         as Exhibit  10.31 to the  Company's  Form 10-Q as of December  31, 1996
         (Commission File Number 0-20774) and incorporated herein by reference.)

10.32    Third  Amendment to the Money Order  Agreement dated November 15, 1996,
         between the Company and the Money Order Supplier.  (Included as Exhibit
         10.32 to the  Company's  Form 10-Q as of December 31, 1996  (Commission
         File Number 0-20774) and incorporated herein by reference.)
<PAGE>
10.33    Amendment  No.1  to the Ace  Cash  Express  401K  Profit  Sharing  Plan
         effective January 1, 1998.  (Included as Exhibit 10.33 to the Company's
         Form 10-Q as of March 31, 1998  (Commission  File Number  0-20774)  and
         incorporated herein by reference.)#

10.34    Amendment No. 1 to Ace Cash Express, Inc. Non-Employee  Directors Stock
         Option Plan.  (Included as Exhibit 10.34 to the Company's  Form 10-K as
         of June 30, 1998 (Commission File No. 0-20774) and incorporated  herein
         by reference.) #

10.35    Amendment No. 2 to Ace Cash Express, Inc. Non-Employee  Directors Stock
         Option Plan.  (Included as Exhibit 10.35 to the Company's  Form 10-K as
         of June 30, 1998 (Commission File No. 0-20774) and incorporated  herein
         by reference.) #

10.36    Ace Cash Express,  Inc. 1997 Stock Option Plan.  (Included as Exhibit A
         to the  Company's  Proxy  Statement  for the  1997  Annual  Meeting  of
         Shareholders  (Commission File No. 0-20774) and incorporated  herein by
         reference.)#

10.37    Amendment  No. 1 to Ace Cash  Express,  Inc.  1997 Stock  Option  Plan.
         (Included as Exhibit  10.37 to the  Company's  Form 10-K as of June 30,
         1998  (Commission   File  No.  0-20774)  and  incorporated   herein  by
         reference.) #

10.38    Form of  Change-in-Control  Executive  Severance  Agreement between the
         Company and each of its three executive officers.  (Included as Exhibit
         10.38 to the Company's Form 10-K as of June 30, 1998  (Commission  File
         No. 0-20774) and incorporated herein by reference.) #

10.39    Money Order  Agreement  dated as of April 16, 1998, but effective as of
         December 16, 1998,  between the Company and Travelers  Express Company,
         Inc.  (Confidential  treatment  for a portion of this document has been
         granted by the  Securities  and  Exchange  Commission  pursuant to Rule
         24b-2 under the Securities Exchange Act of 1934).  (Included as Exhibit
         10.39 to the Company's Form 10-K as of June 30, 1998  (Commission  File
         No. 0-20774) and incorporated herein by reference.)

10.40    Credit  Agreement  dated  as of July  31,  1998,  but  effective  as of
         December  16,  1998,  among the  Company,  Wells  Fargo  Bank  (Texas),
         National  Association,  as agent (the "Credit Agent"),  and the lenders
         named therein,  with Exhibits A and B thereto and Schedules 2.01(a) and
         2.01(b) thereto.  (Included as Exhibit 10.40 to the Company's Form 10-K
         as of June 30, 1998  (Commission  File No.  0-20774)  and  incorporated
         herein by reference.)

10.41    Amended and Restated  Collateral  Trust  Agreement dated as of July 31,
         1998,  but  effective as of December 16, 1998,  among the Company,  the
         Credit Agent, Travelers Express Company, Inc., Principal Life Insurance
         Company  (formerly known as Principal  Mutual Life Insurance  Company),
         and  Wilmington  Trust  Company.  (Included  as  Exhibit  10.41  to the
         Company's Form 10-K as of June 30, 1998  (Commission  File No. 0-20774)
         and incorporated herein by reference.)

10.42    Amended  and  Restated  Assignment  of Deposit  Accounts  and  Security
         Agreement  dated as of July 31, 1998,  but effective as of December 16,
         1998,  between the Company and Wilmington  Trust Company.  (Included as
         Exhibit  10.42  to  the  Company's  Form  10-K  as  of  June  30,  1998
         (Commission File No. 0-20774) and incorporated herein by reference.)

10.43    First  Amendment  to Credit  Agreement  dated as of December  16, 1998,
         among the Company,  the Credit Agent,  and the lenders  named  therein,
         with Schedules 2.01(a) and 2.01(b) thereto.  (Included as Exhibit 10.43
         to the Company's Form 8-K filed on December 23, 1998  (Commission  File
         No. 0-20774) and incorporated herein by reference.)

10.44    Amendment No. 3 to Ace Cash Express, Inc. Non-Employee  Directors Stock
         Option Plan.  (Included as Exhibit 10.44 to the Company's  Form 10-Q as
         of December 31, 1998  (Commission  File No.  0-20774) and  incorporated
         herein by reference.)#

10.45    Amendment  No. 2 to Ace Cash  Express,  Inc.  1997 Stock  Option  Plan.
         (Included as Exhibit  10.45 to the  Company's  Form 10-Q as of December
         31, 1999 (Commission  File Number 0-20774) and  incorporated  herein by
         reference.)#

10.46    Second  Amendment  to Credit  Agreement  dated as of December 15, 1999,
         among the Company,  the Credit Agent , and the lenders  named  therein,
         with Schedules 2.01(a) and 2.01(b) thereto.  (Included as Exhibit 10.46
         to the  Company's  Form 10-Q as of December 31, 1999  (Commission  File
         Number 0-20774) and incorporated herein by reference.)
<PAGE>
10.47    Master Loan Agency  Agreement dated as of August 11, 1999,  between the
         Company and Goleta National Bank. (Confidential treatment for a portion
         of this  document  has been  granted  by the  Securities  and  Exchange
         Commission  pursuant to Rule 24b-2 under the Securities Exchange Act of
         1934.)*

10.48    Money Transfer  Agreement dated as of June 30, 2000, among the Company,
         Travelers Express Company,  Inc., and MoneyGram  Payment Systems,  Inc.
         (Confidential treatment for a portion of this document has been granted
         by the Securities and Exchange  Commission pursuant to Rule 24b-2 under
         the Securities Exchange Act of 1934.)*

10.49    Change-in-Control  Executive Severance Agreement dated as of August 17,
         2000, between the Company and Debra A. Bradford.*#

27       Financial Data Schedule (EDGAR version only)*
------

* Filed herewith
# Management contract or compensatory plan or arrangement

(b)      Reports on Form 8-K
                  None.



<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                     ACE CASH EXPRESS, INC.

                                             By:         /s/  DEBRA A. BRADFORD
                                                  -----------------------------
                                                              Debra A. Bradford
                                                          Senior Vice President
                                                    and Chief Financial Officer

                                             Date:           September 27, 2000


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities on the dates indicated.

Signature                                 Title                             Date
---------                                 -----                             ----

/s/ RAYMOND C. HEMMIG       Chairman of the Board, Director
---------------------
Raymond C. Hemmig

/s/ DONALD H. NEUSTADT      Chief Executive Officer,
----------------------      Director (Principal Executive Officer)
Donald H. Neustadt

/s/ JAY B. SHIPOWITZ        President and Chief Operating Officer
--------------------
Jay B. Shipowitz            Director

/s/ DEBRA A. BRADFORD       Senior Vice President and Chief Financial Officer
---------------------       Treasurer and Secretary (Principal Financial and
Debra A. Bradford           Accounting Officer)


/s/ HOWARD W. DAVIS         Director
-------------------
Howard W. Davis

/s/ MARSHALL B. PAYNE       Director
---------------------
Marshall B. Payne

/s/ EDWARD W. ROSE III      Director
----------------------
Edward W. Rose III

/s/ CHARLES DANIEL YOST     Director
-----------------------
Charles Daniel Yost


<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Shareholders of Ace Cash Express, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets  of Ace  Cash
Express,  Inc. (a Texas  corporation)  and  subsidiaries as of June 30, 2000 and
1999, and the related consolidated statements of earnings,  shareholders' equity
and cash flows for each of the three  years in the period  ended June 30,  2000.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Ace Cash Express,
Inc.  and  subsidiaries  as of June 30, 2000 and 1999,  and the results of their
operations  and their cash flows for each of the three years in the period ended
June 30, 2000, in conformity with accounting  principles  generally  accepted in
the United States.

As explained in Note 1 to the consolidated financial statements, effective
July 1, 1999, the Company changed its method of accounting for costs of start-up
activities.

                                                            ARTHUR ANDERSEN LLP



Dallas, Texas,
August 9, 2000






<PAGE>
<TABLE>
<CAPTION>

                                ACE CASH EXPRESS, INC. AND SUBSIDIARIES
                                      CONSOLIDATED BALANCE SHEETS
                          (in thousands, except share and per share amounts)

                                                                            JUNE 30,        JUNE 30,
                                                                              2000           1999
                                                                         -------------    -------------
<S>                                                                       <C>              <C>
  ASSETS
  Current Assets
      Cash and cash equivalents                                           $ 105,577        $  59,414
      Accounts receivable, net                                                5,985            4,224
      Loans receivable                                                       18,695            5,543
      Prepaid expenses and other current assets                               2,069            1,701
      Inventories                                                             1,418            1,511
                                                                       ------------     ------------
  Total Current Assets                                                      133,744           72,393
                                                                       ------------     ------------

  Noncurrent Assets
      Property and equipment, net                                            36,915           30,372
      Covenants not to compete, net                                           1,429            1,656
      Excess of purchase price over fair value of assets acquired, net       45,929           36,690
      Other assets                                                            3,406            4,122
                                                                        ------------     ------------
  Total Assets                                                            $ 221,423        $ 145,233
                                                                        ============     ============


  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities
      Revolving advances                                                  $  95,000        $  40,100
      Accounts payable, accrued liabilities, and other current               21,242           15,903
       liabilities
      Money order principal payable                                          10,487            5,340
      Current portion of senior secured notes payable                         4,180            4,226
      Term advances                                                           3,469            1,969
      Notes payable                                                             898              330
                                                                        ------------     ------------
  Total Current Liabilities                                                 135,276           67,868
                                                                        ------------     ------------

  Noncurrent Liabilities
      Long-term portion of senior secured notes payable                      12,000           16,000
      Long-term term advances                                                15,031            8,531
      Long-term notes payable                                                   438                -
      Other liabilities                                                       3,519            4,560
                                                                        ------------     ------------
  Total Liabilities                                                         166,264           96,959
                                                                        ------------     ------------

  Commitments and Contingencies

  Shareholders' Equity
    Preferred stock, $1 par value, 1,000,000 shares authorized, none
      issued and outstanding                                                      -                -
    Common stock, $.01 par value, 20,000,000 shares authorized,
      9,984,563 and 10,055,528 shares issued and outstanding,
      respectively                                                              100              101
    Additional paid-in capital                                               22,715           21,691
    Retained earnings                                                        34,745           26,482
    Treasury stock, at cost, 181,400 and 0 shares, respectively             (2,401)                -
                                                                        ------------     ------------
  Total Shareholders' Equity                                                 55,159           48,274
                                                                        ------------     ------------
  Total Liabilities and Shareholders' Equity                             $  221,423        $ 145,233
                                                                        ============     ============

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.



<PAGE>
<TABLE>
<CAPTION>
                                        ACE CASH EXPRESS, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF EARNINGS
                                   (in thousands, except share and per share amounts)

                                                                      YEAR ENDED JUNE 30,
                                                       ----------------------------------------------
                                                            2000            1999           1998
                                                       -------------    ------------     ------------

<S>                                                        <C>             <C>              <C>
Revenues                                                   $140,636        $122,314         $100,194

Store expenses:
    Salaries and benefits                                    38,639          32,435           27,975
    Occupancy                                                21,507          18,381           15,204
    Depreciation                                              5,429           4,728            4,083
    Other                                                    29,093          25,399           19,841
                                                       -------------    ------------     ------------
       Total store expenses                                  94,668          80,943           67,103
                                                       -------------    ------------     ------------
Store gross margin                                           45,968          41,371           33,091
Region expenses                                              11,119           9,369            8,353
Headquarters expenses                                         8,247           7,673            7,198
Franchise expenses                                            1,063           1,288              965
Other depreciation and amortization                           3,798           4,236            3,502
Interest expense, net                                         6,123           4,476            2,437
Other expenses                                                  955             689               49
                                                       -------------    ------------     ------------
Income before income taxes and cumulative
  effect of accounting change                                14,663          13,640           10,587
Income taxes                                                  5,797           5,390            4,185
                                                       -------------    ------------     ------------
Income before cumulative effect of
  accounting change                                           8,866           8,250            6,402
Cumulative effect of accounting change, net
  of income tax benefit of $402                               (603)               -                -
                                                       -------------    ------------     ------------
Net income                                                  $ 8,263         $ 8,250          $ 6,402
                                                       =============    ============     ============

BASIC EARNINGS PER SHARE
  Before cumulative effect of accounting  change             $  .88          $  .83           $  .66
  Cumulative effect of accounting change                      (.06)               -                -
                                                       -------------    ------------     ------------
  Basic earnings per share                                   $  .82          $  .83           $  .66
                                                       =============    ============     ============

  Weighted average number of common
     shares outstanding - basic EPS                          10,067           9,989            9,759
                                                       =============    ============     ============

DILUTED EARNINGS PER SHARE
   Before cumulative effect of accounting  change            $  .86          $  .80           $  .63
   Cumulative effect of accounting change                     (.06)               -                -
                                                       -------------    ------------     ------------
   Diluted earnings per share                                $  .80          $  .80           $  .63
                                                       =============    ============     ============

   Weighted average number of common
      and  dilutive shares outstanding -  diluted EPS        10,361          10,283           10,215
                                                       =============    ============     ============


</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
<TABLE>
<CAPTION>


                                                ACE CASH EXPRESS, INC. AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                     (in thousands, except shares)




                                  COMMON STOCK                                                TREASURY STOCK
                            --------------------------                                  -----------------------
                                                           ADDITIONAL                                                   TOTAL
                                                            PAID-IN        RETAINED                                  SHAREHOLDERS'
                              SHARES         AMOUNT         CAPITAL        EARNINGS       SHARES        AMOUNT          EQUITY
                            ------------    ----------    -----------    ----------     --------     ----------    ---------------


<S>                           <C>               <C>         <C>           <C>                <C>         <C>              <C>
BALANCE, JUNE 30, 1997        9,668,612          $ 96        $19,130       $11,830            -           $  -            $31,056

Stock options exercised         213,549             3          1,490             -            -              -              1,493

Net income                            -             -              -         6,402            -              -              6,402

                            ------------    ----------    -----------    ----------     --------     ----------    ---------------
BALANCE, JUNE 30, 1998        9,882,161            99         20,620        18,232            -              -             38,951

Stock options exercised         173,367             2          1,071             -            -              -              1,073

Net income                            -             -              -         8,250            -              -              8,250

                            ------------    ----------    -----------    ----------     --------     ----------    ---------------
BALANCE, JUNE 30, 1999       10,055,528                       21,691        26,482            -              -
                                                  101                                                                      48,274
Stock options exercised         110,435             1          1,024             -            -              -              1,025

Shares repurchased, at
  cost                        (181,400)           (2)              -             -      181,400        (2,401)            (2,403)

Net income                            -             -              -         8,263            -              -              8,263

                            ------------    ----------    -----------    ----------     --------     ----------    ---------------
BALANCE, JUNE 30, 2000        9,984,563          $100        $22,715       $34,745      181,400       ($2,401)            $55,159
                            ============    ==========    ===========    ==========     ========     ==========    ===============



















</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.



<PAGE>
<TABLE>
<CAPTION>
                                                ACE CASH EXPRESS, INC. AND SUBSIDIARIES
                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                            (in thousands)

                                                                               YEAR ENDED JUNE 30,
                                                                  -------------    -------------     ------------
                                                                    2000             1999             1998
                                                                  -------------    -------------     ------------

Cash flows from operating activities:
<S>                                                                     <C>             <C>              <C>
Net income                                                             $ 8,263          $ 8,250          $ 6,402
   Adjustments to reconcile net income to net cash provided
      by operating activities:
   Depreciation and amortization                                         9,227            8,970            7,592
   Cumulative effect of accounting change                                1,005                -                -
   Deferred tax benefit                                                    322              218            (749)
   Deferred revenue                                                    (3,485)          (2,202)          (1,534)
Changes in assets and liabilities:
   Accounts receivable, net                                            (1,761)            (105)            (846)
   Loans receivable                                                   (13,152)            (805)            (552)
   Prepaid expenses                                                      (824)            (804)                8
   Inventories                                                              93              938            (397)
   Other assets                                                          (321)          (1,297)            1,317
   Accounts payable and other liabilities                                7,361            3,926            2,969
                                                                  -------------    -------------     ------------
          Net cash provided by operating activities                      6,728           17,089           14,210

Cash flows from investing activities:
   Purchases of property and equipment, net                           (12,255)         (10,089)          (5,742)
   Cost of net assets acquired                                        (11,359)          (8,378)          (4,708)
   Investment in ePacific                                              (1,000)                -                -
                                                                  -------------    -------------     ------------
         Net cash used by investing activities                        (24,614)         (18,467)         (10,450)

Cash flows from financing activities:
   Net borrowings from (repayments to) money order supplier              5,147          (3,978)              971
   Net borrowings from revolving line-of-credit                         54,900                -                -
   Term advances from syndicate of banks                                 8,000           10,500              708
   Payment of term advances from previous money order supplier               -          (7,073)          (1,844)
   Net borrowings (repayments) of acquisition-related notes              1,006              102            (414)
      payable
   Repayments under senior secured notes payable                       (4,046)                -                -
   Proceeds from stock options exercised                                 1,025            1,073            1,493
   Purchase of treasury stock                                          (1,983)                -                -
                                                                  -------------    -------------     ------------
      Net cash provided by financing activities                         64,049              624              914
                                                                  -------------    -------------     ------------
Net increase (decrease) in cash and cash equivalents                    46,163            (754)            4,674
Cash and cash equivalents, beginning of year                            59,414           60,168           55,494
                                                                  -------------    -------------     ------------
Cash and cash equivalents, end of year                                $105,577          $59,414          $60,168
                                                                  =============    =============     ============

Supplemental disclosures of cash flows information:
   Interest paid                                                       $ 7,373          $ 5,202          $ 2,663
   Income taxes paid                                                     5,420            4,395            3,508
Supplemental schedule of non-cash investing activities:
   Liabilities incurred in connection with acquired stores             $ 2,097          $   433          $   439

</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>


                     ACE CASH EXPRESS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations

Ace Cash Express,  Inc. (the "Company") was  incorporated  under the laws of the
state of Texas in March 1982. The Company  operates in one line of business with
two segments  (Company-owned  and  franchised  operations)  and provides  retail
financial services, such as check cashing, small consumer loans,  bill-payments,
money orders, wire transfers,  and other transactional services to customers for
a fee. On June 30, 2000,  the Company owned and operated 915 stores in 26 states
and the District of Columbia, and had 157 franchised stores.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its  wholly  owned  subsidiaries.  All  significant  intercompany  accounts  and
transactions have been eliminated.

Operating Segments

In June 1997,  Statement of  Financial  Accounting  Standards  ("SFAS") No. 131,
"Disclosures  about  Segments of an  Enterprise  and Related  Information,"  was
issued  effective for fiscal years ending after December 15, 1998. The Company's
reportable  segments are strategic  business  units that  differentiate  between
company-owned and franchised stores. The accounting policies of the segments are
the same as those described in the summary of significant accounting policies.

Segment  information  for the years ended June 30, 2000,  1999,  and 1998 was as
follows:
<TABLE>
<CAPTION>

                                      COMPANY-OWNED       FRANCHISED       TOTAL
                                      -------------       ----------       -----
                                          (in thousands, except store amounts)
        <S>                                <C>              <C>         <C>
        YEAR ENDED JUNE 30, 2000:
        -------------------------

           Revenue                         $138,099         $2,537      $140,636
           Operating income                  24,065          1,474        25,539
           Total assets                     217,456          3,967       221,423

           Number of stores                     915            157         1,072

        YEAR ENDED JUNE 30, 1999:
        -------------------------
           Revenue                         $120,197         $2,117      $122,314
           Operating income                  22,212            829        23,041
           Total assets                     142,451          2,782       145,233

           Number of stores                     798            120           918

        YEAR ENDED JUNE 30, 1998:
        -------------------------
           Revenue                          $98,529         $1,665      $100,194
           Operating income                  15,875            700        16,575
           Total assets                     132,799          1,836       134,635

           Number of stores                     683             89           772

</TABLE>

<PAGE>

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management to make estimates and  assumptions.
These  estimates  and  assumptions  affect  the  reported  amounts of assets and
liabilities,  the  disclosure  of  contingent  assets and  liabilities,  and the
reported  amounts of revenues and  expenses.  Actual  results  could differ from
those estimates.

Cash and Cash Equivalents

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid investment securities purchased with an original maturity of three months
or less to be cash equivalents.

Accounts Receivable, Net

Accounts  receivable on the consolidated  balance sheets as of June 30, 2000 and
1999 were $6.0 million and $4.2 million, respectively, and include the MoneyGram
receivable  and  other  notes  receivable,  net  of an  allowance  for  doubtful
accounts.

Loans Receivable

Loans receivable on the consolidated balance sheets as of June 30, 2000 and 1999
were $18.7 million and $5.5 million,  respectively.  Loans  receivable  includes
receivables for the Company's payday loan product and the Company's  interest in
the Bank Loans made by Goleta  National  Bank.  Loan losses for the fiscal years
ended June 30, 2000 and 1999 were $4.2 million and $2.8  million,  respectively.
The Company  accounts for the full amount of loans not paid on the due date as a
loan loss in that period.

Through the "payday  loan"  product,  the Company  provides the customer cash in
exchange  for that  customer's  check (in the amount of that cash plus a service
fee) with an agreement to defer the  presentment  or deposit of that check until
the customer's  next payday,  usually a period of two to four weeks.  As of June
30,  2000 and 1999,  the  receivable  for payday  loans was  approximately  $0.8
million and $5.5 million, respectively.

In August 1999,  the Company  entered into a Master Loan Agency  Agreement  (the
"Goleta  Agreement")  with Goleta  National  Bank,  a national  bank  located in
Goleta, California ("Goleta"). Under the Goleta Agreement, the parties agreed to
develop and implement an arrangement under which short-term loans made by Goleta
would be offered at the Company's owned locations. Currently, a Bank Loan may be
up to $500 and must be repaid or renewed in 14 days. Under the Goleta Agreement,
the Company  purchases from Goleta a  participation  representing a material and
significant  portion of each Bank Loan made on a previous  day. An interest rate
of 15% per $100 of Bank Loan is  charged  for each 14 day  loan.  As of June 30,
2000, the receivable for Bank Loans was $17.9 million.

Inventories

Inventories  consist of unsold  lottery  tickets  and other  inventory.  Lottery
tickets  are  stated at  purchase  price and  accounted  for using the  specific
identification  method.  Other  inventories  are stated at cost and  utilize the
first-in,   first-out  method.  No  provision  for  obsolescence  is  considered
necessary.
<TABLE>
<CAPTION>

                                                          JUNE 30,
                                            ---------------------------------
                                                 2000              1999
                                            ---------------    --------------
                                                     (in thousands)

<S>                                                 <C>               <C>
Lottery tickets inventory                           $1,061            $1,211
Other inventory                                        357               300
                                            ---------------    --------------
                                                    $1,418            $1,511
                                            ===============    ==============
</TABLE>


<PAGE>

Property and Equipment

Depreciation  and  amortization of property and equipment is based on the lesser
of the  estimated  useful lives of the  respective  assets or lease  terms.  The
useful lives of property and equipment by class are as follows: store equipment,
furniture and fixtures, four to ten years; leasehold improvements, the lesser of
ten years or the term of the lease;  signs,  eight years; and other property and
equipment,  five to ten years.  Depreciation  is calculated  on a  straight-line
basis.

Intangible Assets

The excess of the purchase price over fair value of net assets acquired is being
amortized on the  straight-line  method over 30 years.  Covenants not to compete
are amortized over the applicable period of the contract, generally ranging from
two to five years.  Company  management  annually  evaluates the useful lives of
intangible  assets,  their  carrying  values,  and their  expected  benefits  in
relation  to the  results  of  operations.  The  unamortized  cost  of  impaired
intangible assets is charged to expense when impairment occurs.

As required,  the Company adopted a new accounting standard,  AICPA Statement of
Position 98-5, "Reporting on the Costs of Start-Up  Activities,"  effective
July 1, 1999. This standard requires that previously  capitalized start-up costs
be  recognized  as a cumulative  effect of change in  accounting  principle  and
expensed fully in the quarter.  Start-up costs, net of tax, of $0.6 million were
expensed in the first  quarter  ended  September 30, 1999. On a pro forma basis,
the  Company's net income would have been $8.9 million  ($0.88 per share),  $8.0
million ($0.80 per share) and $6.2 million ($0.64 per share) for the years ended
June 30, 2000, 1999 and 1998,  respectively,  if this accounting change had been
retroactively applied.

Store Expenses

The direct costs incurred in operating the stores have been  classified as store
expenses  and  are  deducted  from  total  revenues  to  determine  contribution
attributable to the stores. Store expenses include salary and benefit expense of
store employees, rent and other occupancy costs, depreciation of store property,
bank charges, armored and security costs, loan losses, net returned checks, cash
shortages, and other costs incurred by the stores.

Franchise Accounting

The Company includes franchise fees in revenues. Franchise fees include initial,
territory,  and future optional store fees as well as continuing  franchise fees
("royalty  fees") and research and  development  fees.  The Company  offers both
nonexclusive and exclusive franchise arrangements.

Initial fees are recognized when the Company has provided  substantially  all of
its initial  services in accordance  with the franchise  agreements.  Generally,
this occurs  when the related  sites have been  approved or  identified  and the
franchisee  has completed the training  required by the Company.  Related direct
costs,  such as sales  commissions,  are deferred  until revenue is  recognized.
Royalty fees are  recognized  as revenues as they are earned under the franchise
agreements.  For the years  ended  June 30,  2000 and 1999,  approximately  $2.5
million and $2.1 million, respectively, of franchise revenue was recognized.

Cash payments received under franchise agreements prior to the completion of the
earnings  process  are  deferred  until  the  initial  fees  are  recognized  in
accordance with the preceding paragraph.

Income Taxes

The Company has  implemented  the  provisions of SFAS No. 109,  "Accounting  for
Income  Taxes."  SFAS No. 109  utilizes  an asset and  liability  approach,  and
deferred  taxes are  determined  based on the  estimated  future tax  effects of
differences  between  the  financial  statement  and tax  bases  of  assets  and
liabilities given the provisions of the enacted tax laws.
<PAGE>


In accordance with the provisions of SFAS No. 109, a valuation  allowance should
be  recognized,  if it is more  likely  than not that some  portion  or all of a
deferred  tax asset will not be  realized.  The Company  recorded  no  valuation
allowance as of June 30, 2000 or 1999.

Returned Checks

The Company  charges  operations for potential  losses on returned checks in the
period such checks are  returned,  since  ultimate  collection of these items is
uncertain.  Recoveries  on returned  checks are  credited in the period when the
recovery is received.

Software Development Costs

The Company  capitalizes  the external  direct  costs of materials  and services
consumed in developing or obtaining  internal-use  computer software and payroll
and payroll-related costs for employees who are directly associated with and who
devote time to the internal-use  computer software project, to the extent of the
time spent directly on the project.  For the years ended June 30, 2000 and 1999,
the Company capitalized $1.4 million and $0.5 million, respectively.

Earnings Per Share

Earnings per share have been computed  based on the weighted  average  number of
common and dilutive  shares  outstanding  for the respective  periods.  Dilutive
shares include employee and director stock options.

Basic  earnings  per share are  computed by dividing  net income by the weighted
average  number of common  shares  outstanding.  Diluted  earnings per share are
computed by dividing net income by the weighted  average number of common shares
outstanding,  after  adjusting  for the dilutive  effect of stock  options.  The
following  table presents the  reconciliation  of the numerator and  denominator
used in the calculation of basic and diluted  earnings per share, as required by
SFAS No. 128, "Earnings Per Share."

<TABLE>
<CAPTION>
                                                                           YEAR ENDED JUNE 30,
                                                               ---------------------------------------
                                                                   2000          1999          1998
                                                               ----------     ---------     ----------
                                                                            (in thousands)
     <S>                                                        <C>            <C>            <C>
      Income before cumulative effect of accounting
           change (numerator)                                      $8,866         $8,250        $6,402
                                                               ==========     ==========    ==========

      Reconciliation of denominator:
      Weighted average number of common shares
          outstanding - basic EPS                                 10,067          9,989         9,759
      Effect of dilutive stock options                               294            294           456
                                                               ----------     ----------    ----------
      Weighted average number of common and
          dilutive shares outstanding - diluted EPS               10,361         10,283        10,215
                                                               ==========     ==========    ==========
</TABLE>

Fair Value of Financial Instruments

The fair  value of a  financial  instrument  represents  the amount at which the
instrument could be exchanged in a current  transaction between willing parties,
other  than  a  forced  sale  or  liquidation.   The  amounts  reported  in  the
consolidated  balance  sheets  for  trade  receivables,  trade  payables,  notes
receivable,  revolving  advances,  money order  payable,  and notes  payable all
approximate  fair  value.  The  fair  value  of the  interest-rate  swap is $0.6
million.

Reclassifications

Certain  prior year amounts have been  reclassified  to conform with the current
year presentation.

<PAGE>

2. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                           JUNE 30,
                                                             ----------------------------------
                                                                  2000               1999
                                                             ---------------     --------------
                                                                        (in thousands)
<S>                                                                 <C>                <C>
Property and equipment, at cost:
  Store equipment, furniture and fixtures                           $32,046            $25,626
  Leasehold improvements                                             22,795             17,548
  Signs                                                               5,606              5,121
  Other                                                                 445                829
                                                             ---------------     --------------
                                                                     60,892             49,124
           Less - accumulated depreciation and amortization        (23,977)           (18,752)
                                                             ---------------     --------------
                                                                    $36,915            $30,372
                                                             ===============     ==============
</TABLE>

Depreciation  expense was $6.4 million and $5.6 million in fiscal 2000 and 1999,
respectively.

3. ACQUISITIONS AND DISPOSITIONS

During the year ended  June 30,  2000,  the  Company  acquired  the assets of 36
stores in eight separate  purchases from third parties for  approximately  $11.4
million. During the year ended June 30, 1999, the Company acquired the assets of
35 stores in ten separate  purchases from third parties for  approximately  $8.4
million. During the year ended June 30, 1998, the Company acquired the assets of
15 stores in six separate  purchases from third parties for  approximately  $4.7
million.

As a condition  of each  purchase,  the sellers  agreed not to compete  with the
Company for specified  periods ranging from two to five years.  All acquisitions
have been accounted for using the purchase  method of accounting.  Covenants not
to compete were valued at  contractually  agreed upon amounts  which  management
believes correspond to fair value. In connection with the above acquisitions, in
fiscal 2000,  acquisition  costs of $10.8 million were allocated to goodwill and
the remainder to other assets.
<TABLE>
<CAPTION>

                                                        JUNE 30,
                                           ---------------------------------
                                               2000               1999
                                           --------------     --------------
                                                     (in thousands)

<S>                                              <C>              <C>
Covenants not to compete, at cost                $6,549           $5,864
Less - accumulated amortization                 (5,120)          (4,208)
                                             -----------     -----------
                                                 $1,429          $1,656
                                             ===========     ===========
</TABLE>

The excess  purchase price over fair value of net assets acquired is as follows:
<TABLE>
<CAPTION>
                                                      JUNE 30,
                                             -----------------------------
                                                2000             1999
                                             -----------     -----------
                                                    (in thousands)
<S>                                             <C>             <C>

Excess of purchase price over fair value
     of net assets                              $51,745         $40,995
 Less - accumulated amortization                 (5,816)         (4,305)
                                             -----------     -----------
                                                $45,929         $36,690
                                             ===========     ===========

</TABLE>





4. FINANCING ARRANGEMENTS AND GUARANTEES

Senior Secured Notes Payable

The Company has  outstanding $16 million of 9.03% Senior Secured Notes ("Notes")
issued to Principal Life Insurance  Company  (formerly known as Principal Mutual
Life  Insurance  Company)  ("Principal")  under a Note Purchase  Agreement.  The
original $20 million  principal  amount of the Notes is due in five equal annual
installments  of $4 million  each,  which  began  November  15,  1999.  Interest
payments are due semiannually, beginning May 15, 1997. The Notes include various
restrictive  covenants.  The  Company is in  compliance  with these  restrictive
covenants.  There is $180,000 and $226,000 of accrued interest on these notes as
of June 30, 2000 and 1999, respectively.

The Notes are secured by a security  interest in substantially all the assets of
the Company. The collateral arrangements are subject to the Amended and Restated
Collateral  Trust Agreement  dated as of July 31, 1998 (the "Amended  Collateral
Trust  Agreement")  that was  signed  with the  Credit  Agreement.  The  Amended
Collateral  Trust Agreement  created a collateral  trust,  with Wilmington Trust
Company  as  trustee,  to secure  the  Company's  obligations  under the  Credit
Agreement  and to  the  Company's  two  other  secured  lenders,  Principal  and
Travelers Express Company,  Inc. The Amended Collateral Trust Agreement includes
agreements  regarding the priority of  distributions to the secured lenders upon
foreclosure and liquidation of the collateral  subject thereto and certain other
intercreditor  arrangements.  The Company also  executed an Amended and Restated
Assignment of Deposit  Accounts and Security  Agreement  with  Wilmington  Trust
Company to grant the  trustee a security  interest in the same  collateral  that
secures the Company's obligations under the Credit Agreement.

Money Order Agreement

In April 1998, the Company signed a money order agreement with Travelers Express
Company, Inc. ("Travelers Express"), effective December 17, 1998. This agreement
replaced  the  previous  money order  agreement  with the  previous  money order
supplier that was  terminated as of December 16, 1998.  Under this new five-year
agreement,  the Company exclusively sells Travelers Express money orders,  which
bear the  Company's  logo.  The Company also signed a five-year  agreement  with
Travelers Express,  effective in April 1998, to offer an electronic bill-payment
service to the Company's  customers.  In conjunction  with these two agreements,
the  Company  received $3 million  from  Travelers  Express in April 1998,  $0.4
million  per year for the  fiscal  years  ended June 30,  2000 and 1999,  and is
entitled  to  receive an  additional  $0.4  million  per year for the next three
years. The $3 million payment was deferred and included in other  liabilities in
the  consolidated  balance  sheets.  If the money order  agreement is terminated
under certain  circumstances  before the  expiration of its five-year  term, the
Company  will be  obligated  to repay a portion of the $3 million and the annual
amounts  received  from  Travelers  Express.  The  money  order  agreement  with
Travelers  Express (unlike the previous money order agreement) does not allow an
extended deferral of remittances of money order proceeds.  The Company's payment
and other  obligations to Travelers  Express under the money order agreement are
secured by a  subordinated  lien on the Company's  assets.  The total $5 million
from  Travelers  Express is being  amortized on a  straight-line  basis over the
five-year term of the agreements beginning January 1999.

Notes Payable

Notes payable,  related to acquired stores, bear interest at 5%, and are due six
months after acquisition,  with the exception of one  non-interest-bearing  note
with a balance of $700,000 which is payable in monthly  installments  of $20,000
until maturity on May 1, 2003.  Interest was imputed on this note at an interest
rate of 5%. Notes  payable  were  approximately  $1.3 million and $0.3  million,
respectively, as of June 30, 2000 and 1999.
<PAGE>

Credit Facilities

In July 1998,  the  Company  signed an  agreement  ("Credit  Agreement")  with a
syndicate of banks, led by Wells Fargo Bank (Texas),  National Association,  and
the credit  facilities under the Credit Agreement were renewed in December 1999.
This Credit Agreement  provides a senior secured credit facility of $165 million
of financing to the Company. The Credit Agreement contains a committed Revolving
Facility of $130 million,  to be used for working capital and general  corporate
purposes and a committed  Term-Loan Facility of $35 million,  to be used to fund
acquisitions  and provide  capital for  internal  expansion.  Additionally,  the
Company has obtained a $25 million uncommitted  working capital  line-of-credit,
for a total available  working capital facility of $155 million.  The Company is
subject to various restrictive  covenants stated in the Credit Agreement.  These
covenants,  which are  typical of those found in loan  agreements  of that kind,
include  restrictions  on the  incurrence of  indebtedness  from other  sources,
restrictions  on  advances  to or  investments  in other  persons  or  entities,
restrictions  on  significant  acquisitions,  restrictions  on  the  payment  of
dividends to shareholders or the repurchase of shares,  and the requirement that
various  financial ratios be maintained.  The Revolving  Facility has a one-year
term and is renewable annually.

The  Term-Loan  Facility  has a  one-year  term  with a  four-year  amortization
beginning  after the expiration of the one-year term.  Interest on the Revolving
Facility  will bear  interest  at a rate per annum of either  (at the  Company's
discretion) the prime rate or LIBOR plus 0.75%. The Term-Loan Facility will bear
interest at a rate per annum either (at the Company's  discretion)  of the prime
rate plus 0.25% or LIBOR plus 1.75%.  The LIBOR rate  effective at June 30, 2000
was  6.69%.  The  Company  will pay an unused  commitment  fee on the  Revolving
Facility  of 0.20% and the  Term-Loan  Facility  of 0.45%.  It is the  Company's
expectation that the Credit Agreement will continue to be renewed annually.

Debt Maturity Schedule

Scheduled  maturities of debt for the years  following June 30, 2000,  including
the senior  secured  notes  payable,  term  advances,  and notes  payable are as
follows (in thousands):

<TABLE>
<CAPTION>

          YEAR ENDING JUNE 30:
            <S>                                          <C>
            2001........................................ $ 8,395
            2002........................................   8,865
            2003........................................   8,845
            2004........................................   8,625
            2005 and thereafter ........................   1,156
                                                        ----------
                                                         $35,886
                                                        ==========
</TABLE>

MoneyGram Guarantees and Incentive Bonuses

Existing  MoneyGram  Services.  The  Company  is an agent  for the  receipt  and
transmission  of wire  transfers of money  through the  MoneyGram  network.  The
Company's agency relationship is currently governed by the 1996 MoneyGram Master
Agreement,  as amended (the  "Existing  MoneyGram  Agreement"),  with  MoneyGram
Payment Systems,  Inc. ("MPS"), an affiliate of Travelers Express.  The Existing
MoneyGram  Agreement  expires by its terms on December  31,  2000.  The Existing
MoneyGram  Agreement provides for a revenue guarantee on acquired stores for the
conversion of wire transfer  services to MoneyGram  from another  supplier.  The
amount of the  guarantee is  equivalent  to the annual  aggregate  wire transfer
revenue for the acquired  stores  derived from another  supplier.  The amount of
guarantee revenue, which represents the difference between the guarantee and the
Company's actual wire transfer service revenue from the acquired stores, for the
fiscal years ended June 30, 2000 and 1999,  was  approximately  $2.0 million and
$1.0 million, respectively.

In June 1996,  upon the  extension  of the Existing  MoneyGram  Agreement to its
current  expiration  date,  the Company  received a bonus of $2.0  million.  The
Company also receives incentive bonuses under the Existing  MoneyGram  Agreement
for opening or acquiring new  MoneyGram  service  locations.  All of the bonuses
received  by the  Company  under  the  Existing  MoneyGram  Agreement  have been

<PAGE>

deferred  and  included in "Other  liabilities"  in the  Company's  consolidated
balance  sheets and are  amortized  to  revenues  over the term of the  Existing
MoneyGram Agreement.  During the fiscal years ended June 30, 2000 and 1999, $2.6
million and $2.2 million,  respectively,  of this  amortization was recorded and
included in money transfer services revenues. The deferred revenue balance as of
June 30, 2000 and 1999, was $3.7 million and $3.6 million, respectively.

New Money Transfer Agreement.  In June 2000, the Company signed a Money Transfer
Agreement with Travelers Express and MPS to become effective upon the expiration
of the Existing MoneyGram Agreement (the "New MoneyGram Agreement").  During the
seven-year  term of the New MoneyGram  Agreement,  the Company will  exclusively
offer  and sell  MoneyGram  wire  transfer  services.  Under  the New  MoneyGram
Agreement  (as under the  Existing  MoneyGram  Agreement)  the Company will earn
commissions  for each  transmission  and receipt of money  through the MoneyGram
network  effected at a Company  location;  those  commissions will equal varying
percentages of the fees charged by MPS to consumers for the MoneyGram services.

Under the New MoneyGram Agreement,  the Company will also be entitled to receive
a total of approximately  $12.5 million in incentive  bonuses,  payable in equal
monthly installments  (without interest) over the seven-year term. The amount of
those monthly installments will be subject to reduction if the Company closes or
sells a significant  number of those locations at which  MoneyGram  services are
offered at the  beginning  of the New  MoneyGram  Agreement.  In  addition,  the
Company will be entitled to receive  certain  incentive  payments  regarding new
MoneyGram service locations that it opens or acquires during the term of the New
MoneyGram Agreement.

Derivative Instruments and Hedging Activities

To reduce its risk of greater  interest expense upon a rise in the prime rate or
LIBOR,  the Company has entered into three  interest-rate  swap  agreements with
Bank of  America.  Those  agreements  effectively  converted  a  portion  of the
Company's floating-rate interest obligations to fixed-rate interest obligations.
With respect to the revolving line-of-credit facility, the first notional amount
is $33 million for a two-year  period that began January 4, 1999, and the second
notional amount is $10 million for a  sixteen-month  period that began September
3, 1999.  The third  notional  amount under the term-loan  facility is currently
$9.0 million,  with decreases in calendar year 2000.  The notional  amounts were
determined based on the Company's minimum  projected  borrowings during calendar
years 1999 and 2000.  The fixed rate  applicable  to the notional  amount of $33
million under the revolving  line-of-credit facility was 5.14% for calendar year
1999 and is 5.23% for  calendar  year  2000.  The fixed rate  applicable  to the
notional  amount of $10 million under the revolving  line-of-credit  facility is
6.00% for  calendar  years  1999 and  2000.  The fixed  rate  applicable  to the
notional  amount of $9.0  million  under the  term-loan  facility  was 6.23% for
calendar year 1999 and is 6.38% for calendar year 2000.

The  Company is  required  to adopt SFAS No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities," by its first quarter ending  September 30,
2000.  This  standard  requires  the  Company  to record  the fair  value of its
interest-rate swaps as an asset or liability in the consolidated  balance sheet.
Changes  in the fair value of the  interest-rate  swaps  will be  reported  as a
component of shareholders'  equity in the  consolidated  balance sheet. The fair
value of the Company's existing  interest-rate  swaps is $0.6 million as of
June 30, 2000.

5. ACCOUNTS PAYABLE, ACCRUED LIABILITIES, AND OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>

                                                         JUNE 30,
                                             ---------------------------------
                                                 2000               1999
                                             --------------     --------------
                                                      (in thousands)

<S>                                                <C>                <C>
Accounts payable - trade                           $ 8,761            $ 4,165
Accrued salaries                                     2,813              4,268
Deferred revenue - current                           3,347              2,881
Money transfer payable                               1,454                709
Other                                                4,867              3,880
                                             --------------     --------------
                                                   $21,242            $15,903
                                             ==============     ==============
</TABLE>

<PAGE>


6. OTHER LIABILITIES - NONCURRENT
<TABLE>
<CAPTION>

                                                         JUNE 30,
                                             ---------------------------------
                                                 2000               1999
                                             --------------     --------------
                                                      (in thousands)

<S>                                               <C>                <C>
Deferred revenue - noncurrent                     $  3,459           $  4,152
Unearned franchise fees and other                       60                408
                                             --------------     --------------
                                                  $  3,519           $  4,560
                                             ==============     ==============
</TABLE>

7.  SHAREHOLDERS' EQUITY

Stock Option Plans

Employee Stock Option Plans. The Company sponsors the 1997 Stock Option Plan (as
amended,  the "Plan") for eligible  employees.  The original  employee plan, the
1987 Stock Option Plan,  expired  during  fiscal 1998  (though  options  granted
thereunder  continue to be effective in accordance  with their  terms),  and the
Company  adopted the 1997 Stock  Option Plan for eligible  employees.  There are
1,404,079  shares of Common Stock reserved for grants of options under these two
plans.  Options are granted at the sole  discretion  of the Board of  Directors,
upon the recommendation of its Compensation  Committee, to selected employees of
the  Company.   Outstanding  options  are  generally   exercisable  annually  in
installments  over a  three-to-four  year  period  from  the date of grant at an
exercise  price of not less than the fair market  value at the grant  date.  The
options expire either at five or ten years after date of grant.

In accordance with SFAS No. 123, "Accounting for Stock-Based  Compensation," the
Company accounts for stock-based compensation programs using the intrinsic value
method, and accordingly,  stock options do not represent compensation expense in
the  determination  of net income in the  consolidated  statements  of earnings.
Under the intrinsic value method,  compensation  expense is equal to the excess,
if any,  of the  quoted  market  price of the stock at the  grant  date over the
amount the employee must pay to acquire the stock. Had stock option compensation
expense  been  determined  consistent  with the fair value  method of  measuring
compensation  expense  under SFAS No. 123,  the pro forma effect for fiscal 2000
and  1999  would  have  been  a  reduction  in  the   Company's  net  income  of
approximately  $0.5 million and $0.3 million,  respectively,  and a reduction in
diluted earnings per share of approximately $.05 and $.03, respectively.

In determining the pro forma stock compensation  expense, the fair value of each
option grant is estimated  on the date of grant using the  Black-Scholes  option
pricing model with the following weighted-average assumptions used for grants in
fiscal 2000 and 1999,  respectively:  expected volatility of 46% for both years;
expected lives of 4.3 and 4.6 years;  risk-free interest rates of 6.1% and 4.7%;
and no expected dividends.

Exercise  prices for employee  options  outstanding as of June 30, 2000,  ranged
from $4.11 to 18.00 (fair market value on dates of grant).  The following  table
provides certain  information with respect to stock options  outstanding at June
30, 2000:

<TABLE>
<CAPTION>
                                                                                     WEIGHTED-AVERAGE
                                                                                        REMAINING
                 RANGE OF EXERCISE PRICES            STOCK OPTIONS  WEIGHTED-AVERAGE   CONTRACTUAL
                                                      OUTSTANDING    EXERCISE PRICE       LIFE
          ---------------------------------------    -------------    ------------    -------------
                      <S>                                <C>              <C>             <C>
                       Under $5.40                         35,127          $ 4.19          0.4

                      $5.41 - $7.20                       118,020            6.91          1.3

                      $7.21 - $9.00                        48,100            7.37          1.8

                      $9.01 - $10.80                            0             0.0          0.0

                     $10.81 - $12.60                      180,307           12.02          6.9

                     $12.61 - $14.40                      430,006           13.57          8.5

                     $14.41 - $16.20                       74,250           14.92          9.1

                     $16.21 - $18.00                      167,500           17.02          9.5
                                                     -------------
                                                        1,053,310          $12.58          7.0
                                                     =============
</TABLE>
<PAGE>

The following table provides certain  information with respect to employee stock
options exercisable at June 30, 2000:
<TABLE>
<CAPTION>
                                                   STOCK            WEIGHTED-
                                                  OPTIONS            AVERAGE
              RANGE OF EXERCISE PRICES         EXERCISABLE       EXERCISE PRICE
       ---------------------------------     --------------    -----------------
               <S>                                 <C>                 <C>
                 Under $5.40                        35,127             $4.19

                $5.41 - $7.20                      118,020              6.91

                $7.21 - $9.00                       48,100              7.37

                $9.01 - $10.80                           0               0.0

               $10.81 - $12.60                      87,478             11.98

               $12.61 - $14.40                      50,738             13.33

               $14.41 - $16.20                      10,311             14.59

               $16.21 - $18.00                           0               0.0
                                             --------------
                                                   349,774             $9.08
                                             ==============
</TABLE>
The fair value of options granted during the years ended June 30, 2000 and 1999,
calculated using the Black-Scholes option pricing model, was approximately $6.87
per share and $6.06 per share, respectively.

The following  table  summarizes  stock option activity under the two employees'
stock option plans:
<TABLE>
<CAPTION>
                                                                                    AVAILABLE FOR         WEIGHTED
                                                  RESERVED          OUTSTANDING          GRANT          AVERAGE PRICE
                                                --------------     --------------    ---------------    ---------------
       <S>                                         <C>                  <C>                <C>                <C>
       Shares at June 30, 1997                      1,194,501            749,936            444,565            $ 5.40

       Expiration of 1987 stock option plan         (504,090)                  -          (504,090)                 -
       1997 stock option plan                         900,000                  -            900,000                 -
       Exercised                                    (195,549)          (195,549)                  -              4.88
       Canceled                                             -           (85,425)             85,425              7.14
       Granted                                              -            248,707          (248,707)             12.29
                                                --------------     --------------    ---------------
       Shares at June 30, 1998                      1,394,862            717,669            677,193              7.73

       Exercised                                    (173,367)          (173,367)                  -              4.54
       Canceled                                      (17,206)           (78,419)             61,213             11.68
       Granted                                              -            331,105          (331,105)             13.49
                                                --------------     --------------    ---------------
       Shares at June 30, 1999                      1,204,289            796,988            407,301             10.42

       Increase in shares reserved for options        315,000                  -            315,000                 -
       Exercised                                    (110,435)          (110,435)                  -              6.65
       Canceled                                       (4,775)          (102,729)             97,954             13.46
       Granted                                              -            469,486          (469,486)             15.07
                                                --------------     --------------    ---------------
       Shares at June 30, 2000                      1,404,079          1,053,310            350,769            $12.58
                                                ==============     ==============    ===============
</TABLE>

Non-employee Director Stock Option Plan. In 1995, the Board of Directors and the
shareholders of the Company approved the adoption of a nonqualified non-employee
director stock option plan. The purpose of this plan is to permit the Company to
grant options to the Company's outside directors as part of their  compensation.
The plan  originally  had 135,000  shares  reserved for issuance and in November
1998,  an  amendment  was  approved to increase the number of shares to 260,000.
Options  as to 136,750  shares  have been  granted  under the plan at a weighted
average exercise price of $9.53 per share. During the fiscal year ended June 30,
2000,  no shares  were  exercised  and none  were  canceled.  Had  stock  option
compensation  expense been  determined  consistent with the fair value method of
measuring  compensation  expense  under SFAS No. 123,  the pro forma  effect for
fiscal 2000 and 1999 would have been a reduction in the  Company's net income of
approximately $32,000 and $25,000,  respectively,  and with no impact on diluted
earnings per share for either year.
<PAGE>

In determining the pro forma stock compensation  expense, the fair value of each
non-employee  director  option grant is estimated on the date of grant using the
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions  used for  grants in fiscal  2000 and 1999,  respectively:  expected
volatility of 46% for both years; expected lives of 4.9 and 4.8 years; risk-free
interest rates of 6.1% and 4.7%; and no expected dividends.

Exercise prices for  non-employee  director  options  outstanding as of June 30,
2000,  ranged from $4.11 to $16.38 (fair  market  value on dates of grant).  The
following  table  provides  certain  information  with respect to stock  options
outstanding at June 30, 2000:
<TABLE>
<CAPTION>
                                                                                     WEIGHTED-AVERAGE
                                                                                        REMAINING
                 RANGE OF EXERCISE PRICES            STOCK OPTIONS  WEIGHTED-AVERAGE   CONTRACTUAL
                                                      OUTSTANDING    EXERCISE PRICE       LIFE
              -----------------------------------    -------------    ----------     -----------
                      <S>                                 <C>           <C>           <C>
                         Under $5.40                       15,750        $ 4.11          0.4

                        $5.41 - $7.20                      36,000          6.55          1.3

                        $7.21 - $9.00                           0           0.0          0.0

                        $9.01 - $10.80                          0           0.0          0.0

                       $10.81 - $12.60                     27,000         12.42          2.4

                       $12.61 - $14.40                     20,000         13.25          3.4

                       $14.41 - $16.20                          0           0.0          0.0

                       $16.21 - $18.00                     20,000         16.38          4.4
                                                    --------------
                                                          118,750        $10.35          2.3
                                                    ==============
</TABLE>

The following table provides  certain  information  with respect to non-employee
director stock options exercisable at June 30, 2000:
<TABLE>
<CAPTION>

                                           STOCK OPTIONS      WEIGHTED-AVERAGE
        RANGE OF EXERCISE PRICES            EXERCISABLE        EXERCISE PRICE
     --------------------------------     --------------    -----------------
              <S>                               <C>                   <C>
               Under $5.40                       15,750                $4.11

              $5.41 - $7.20                      36,000                 6.55

              $7.21 - $9.00                           0                  0.0

              $9.01 - $10.80                          0                  0.0

             $10.81 - $12.60                     18,000                12.42

             $12.61 - $14.40                      6,664                13.25

             $14.41 - $16.20                          0                  0.0

             $16.21 - $18.00                          0                  0.0
                                          --------------
                                                 76,414                $8.01
                                          ==============
</TABLE>

The fair value of options granted during the years ended June 30, 2000 and 1999,
calculated using the Black-Scholes option pricing model, was approximately $7.90
per share and $6.09 per share, respectively.

Stock Repurchase Program

In August 1999, the Company's Board of Directors  authorized the repurchase from
time to time of up to  approximately $4 million of the Company's Common Stock in
the open market or in  negotiated  transactions.  In August 2000,  the Company's
Board of Directors  authorized the repurchase of an additional $1 million of the
Company's  Common  Stock.  This stock  repurchase  program will remain in effect
unless discontinued by the Board of Directors.  As of June 30, 2000, the Company
had repurchased 181,400 shares at an average price of $13.25 per share.
<PAGE>

8. INCOME TAXES

The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
                                               YEAR ENDED JUNE 30,
                               ------------------------------------------------
                                   2000              1999              1998
                               --------------    --------------     -----------
                                               (in thousands)
<S>                                   <C>               <C>             <C>
Federal income tax                    $4,212            $4,274          $4,083
State income tax                         861               898             851
                               --------------    --------------     -----------
                                       5,073             5,172           4,934
Deferred                                 322               218           (749)
                               --------------    --------------     -----------
                                      $5,395            $5,390          $4,185
                               ==============    ==============     ===========
</TABLE>

The net deferred tax asset consists of the following:

<TABLE>
<CAPTION>
                                                      JUNE 30,
                                     -----------------------------------------
                                           2000                   1999
                                     ------------------     ------------------
                                                    (in thousands)
<S>                                             <C>                    <C>
Gross assets                                    $3,547                 $3,913
Gross liabilities                              (2,461)                (1,745)
                                     ------------------     ------------------
Net deferred tax asset                          $1,086                 $2,168
                                     ==================     ==================
</TABLE>

The tax effect of significant  temporary  differences  representing deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
                                                     JUNE 30,
                                     -----------------------------------------
                                           2000                   1999
                                     ------------------     ------------------
                                                   (in thousands)
<S>                                               <C>                    <C>
Accrued liabilities and other                     $976                   $488
Deferred revenue                                 2,571                  2,588
Depreciation and amortization                  (2,461)                  (908)
                                     ------------------     ------------------
                                                $1,086                 $2,168
                                     ==================     ==================
</TABLE>

The  provisions  for taxes on income as reported  differ from the tax  provision
computed by applying the statutory federal income tax rate of 34% as follows:
<TABLE>
<CAPTION>
                                                             YEAR ENDED JUNE 30,
                                                ------------------------------------------
                                                  2000             1999            1998
                                                -----------     ----------     -----------
                                                              (in thousands)
<S>                                               <C>            <C>             <C>
Federal income tax provision on income at
  statutory rate of 34%                             $4,644         $4,638          $3,600
State taxes, net of federal benefit                    611            702             562
Amortization of excess purchase price over
  fair value of assets acquired                        109             84              84
Other-net                                               31           (34)            (61)
                                                -----------     ----------     -----------
Income tax provision                                $5,395         $5,390          $4,185
                                                ===========     ==========     ===========
</TABLE>
<PAGE>

9. COMMITMENTS AND CONTINGENCIES

The Company  leases its facilities and certain  equipment  under  non-cancelable
operating  leases.  Most of the Company's  facility  leases contain options that
allow the Company to renew leases for periods that generally range from three to
nine years.  At June 30, 2000,  future  minimum  rental  payments under existing
leases were as follows (in thousands):
<TABLE>
<CAPTION>

     YEAR ENDING JUNE 30:
      <S>                                                         <C>
       2001...................................................     $14,274
       2002...................................................      10,167
       2003...................................................       6,641
       2004...................................................       3,262
       2005 and thereafter ...................................       1,355
                                                                ----------
                                                                   $35,699
                                                                ==========
</TABLE>

Rent expense was approximately $14.9 million,  $12.9 million,  and $10.7 million
for the years ended June 30, 2000, 1999, and 1998, respectively.

The Company  has entered  into an  agreement  to settle the lawsuit  against the
Company  in  Arkansas,  Angie  Gwatney  v.  Ace Cash  Express,  Inc.  Under  the
settlement,  qualified customers will receive  certificates that may be redeemed
for prepaid  telephone cards from the Company.  The face amount of the telephone
cards  will  equal  75% of the  total  amount of fees  ($2.2  million)  that the
customers paid the Company in deferred-presentment transactions from February 9,
1996  through  June 15, 1999.  It is  impossible  to predict the number and face
amount  of the  telephone  cards  that  the  Company  will  have to  provide  to
customers.  But, based on its estimate of the  distribution of those cards,  the
Company has provided in its financial  statements a total of $640,000 to satisfy
its settlement  obligations.  The settlement  agreement has been approved by the
court, and the Company believes that the approval will be final and effective on
October 5, 2000.  The  Company is involved  in various  other legal  proceedings
incidental to the conduct of its business.  Management believes that these legal
proceedings  will not result in any material  impact on the Company's  financial
condition and results of operations.

10. EMPLOYEE BENEFITS PLANS

The Company has  established a 401(k)  savings plan on behalf of its  employees.
Employees  may  contribute up to 20% of their annual  compensation  to the plan,
subject to  statutory  maximums.  The Board of  Directors  has  authorized a 25%
matching of employee  contributions made to the plan beginning January 1999. The
Company's matching contributions were approximately $217,000 and $79,000 for the
years ended June 30, 2000 and 1999, respectively.

11. RELATED PARTY TRANSACTIONS

In March and April 2000, the Company  invested a total of $1 million in ePacific
Incorporated  ("ePacific"),  a private  company  in the  business  of  providing
customized  debit-card payment systems and electronic funds transfer  processing
services, which has been recorded under the cost method and is included in other
assets on the  consolidated  balance  sheet.  ePacific,  formerly  a  controlled
subsidiary of Goleta,  provides the debit-card system and processing services to
Goleta  to  enable  it to make the Bank  Loans  described  above in  Summary  of
Significant Accounting Policies - Loans Receivable.

The Company's investment in ePacific was made at the same times, and on the same
terms, as the investment by two venture capital investors. The Company purchased
approximately  14% of the shares of ePacific's  Series A  Convertible  Preferred
Stock purchased by the group of investors. The terms of those shares are typical
of preferred  stock issued and  purchased in venture  capital  investments,  and
include  the  right  to  periodic  dividends  from  ePacific,  the  right  to  a
preferential  distribution  upon  liquidation  of ePacific,  voting  rights with
ePacific  common  stock,  and the right to  convert  the  preferred  stock  into
ePacific  common stock.  Under a  stockholders'  agreement with ePacific and its
other  stockholders,  the Company agreed to certain  restrictions on transfer of
its ePacific stock,  received certain securities  registration  rights regarding
resale of its ePacific stock,  and received the right to designate one person to
serve as a director of  ePacific.  The Company  designated  Jay  Shipowitz,  its
President and Chief Operating Officer, to serve as a director of ePacific.

Management  believes the  transactions  with ePacific are at arms length and are
under  terms no more or less  favorable  to the  Company  than  those with other
vendors.


<PAGE>

12. SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized  quarterly  financial  data for the fiscal years ended June 30, 2000,
1999, and 1998, are as follows:

<TABLE>
<CAPTION>


                                                                  THREE MONTHS ENDED
                                       ----------------------------------------------------------------     YEAR ENDED
                                         SEPT 30         DEC 31           MAR 31           JUNE 30           JUNE 30
                                       -----------    ------------     -------------    ---------------  ----------------
                                                            (in thousands, except per share amounts)


2000:
<S>                                       <C>             <C>             <C>              <C>               <C>
Revenues                                  $30,588         $32,284         $41,337          $36,427           $140,636
Income before cumulative effect
  of  accounting change                     1,022           1,403           5,177            1,264              8,866
Diluted earnings per share before
  cumulative effect of accounting
  change                                      .10             .14             .51              .11                .86
Net income                                    419           1,403           5,177            1,264              8,263
Diluted earnings per share                    .04             .14             .51              .11                .80

1999:
Revenues                                  $26,023         $28,656         $36,009          $31,626           $122,314
Net income                                    796           1,116           4,095            2,243              8,250
Diluted earnings per share                    .08             .11             .40              .22                .80

1998:
Revenues                                  $21,694         $23,125         $29,340          $26,035           $100,194
Net income                                    610             824           3,148            1,820              6,402
Diluted earnings per share                    .06             .08             .31              .18                .63

</TABLE>

The Company's  business is seasonal  because of the impact of cashing tax refund
checks  and two  other  tax-related  services  --  electronic  tax  filings  and
processing  applications  for  refund  anticipation  loans.  The impact of these
services is in the third and fourth quarter of the Company's fiscal year.