##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for the
quarterly period ended September 30, 2006.
 o
    
    TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 for
the transition period from  to .
 Commission File No. 1-13919
 Xponential, Inc.
  Delaware
(State or other jurisdiction of
    
    75-2520896 
(I.R.S. Employer Identification No.)incorporation or organization)
 6400 Atlantic Boulevard, Suite 190, Norcross, Georgia 30080
 (678) 720-0660
 þ o
 o þ
 þ o
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XPONENTIAL, INC.
 INDEX
 PagePART I    FINANCIAL INFORMATIONItem 1Consolidated Financial Statements
    
    
    3Consolidated Balance Sheets as of September 30 and June 30, 2006
    
    
    3Consolidated Statements of Operations for the Three Months
Ended September 30, 2006 and 2005
    
    
    4Consolidated Statements of Cash Flows for the Three Months
Ended September 30, 2006 and 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2Managements Discussion and Analysis or Plan of Operation
    
    
    15Item 3Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4Controls and Procedures
    
    
    19PART II    OTHER INFORMATIONItem 6Exhibits
    
    
    20Certification of CEO Pursuant to Rule 13a-14(a)/15d-14(a)Certification of CFO Pursuant to Rule 13a-14(a)/15d-14(a)Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 XPONENTIAL, INC. AND SUBSIDIARIES
 
   September 30, 2006
    
    
    June 30, 2006(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    787
    
    
    $
    1,932Investments-marketable securities
    
    
    8,602
    
    
    
    8,741Accounts and short term notes receivable
    
    
    451
    
    
    
    1,499Pawn service charges receivable
    
    
    474
    
    
    
    524Pawn loans receivable
    
    
    4,304
    
    
    
    4,763Inventories, net
    
    
    5,647
    
    
    
    5,242Prepaid expenses and other current assets
    
    
    247
    
    
    
    171Total current assets
    
    
    20,512
    
    
    
    22,872Property and equipment, net
    
    
    2,543
    
    
    
    2,464Notes
receivable  American IronHorse Motorcycle Company, Inc. (Note 10)
    
    
    900
    
    
    
    Investment in American IronHorse Motorcycle Company, Inc. (Note 10)
    
    
    5,606
    
    
    
    6,451Investment in Integrity Mutual Funds, Inc. (Note 11)
    
    
    814
    
    
    
    586Note issuance costs, net of amortization of $229 and $179 as of September 30, 2006 and June 30, 2006,
respectively
    
    
    1,663
    
    
    
    1,713Other assets, net of amortization of $99 and $86 as of September 30, 2006 and June 30, 2006, respectively
    
    
    174
    
    
    
    157Total assets
    
    $
    32,212
    
    
    $
    34,243Liabilities and Stockholders EquityCurrent liabilities:Bank line of credit
    
    $
    787
    
    
    $
    1,880Current maturities of notes payable
    
    
    515
    
    
    
    577Accounts payable and accrued expenses
    
    
    392
    
    
    
    495Accrued payroll and payroll taxes
    
    
    254
    
    
    
    150Deferred revenue
    
    
    186
    
    
    
    152Accrued interest
    
    
    144
    
    
    
    132Redeemable Preferred Stock  Series A
    
    
    500
    
    
    
    500Total current liabilities
    
    
    2,778
    
    
    
    3,886Long term notes payable:8% limited recourse convertible notes, net of discount of $117 and $111 at September 30, 2006
and June 30, 2006, respectively
    
    
    19,883
    
    
    
    19,889Other long term notes payable
    
    
    1,084
    
    
    
    1,191Total long term notes payable
    
    
    20,967
    
    
    
    21,080Commitments and contingenciesRedeemable
preferred stock  Series A; par value $0.01; 5% cumulative dividend, liquidation preference
$5.00 per share; 871,630 shares issued at September 30, 2006 and June 30, 2006, respectively
    
    
    3,858
    
    
    
    3,858Total long term liabilities
    
    
    24,825
    
    
    
    24,938Total liabilities
    
    
    27,603
    
    
    
    28,824Stockholders equity:Preferred
stock  Series B; par value $0.01; 5% cumulative dividend, liquidation preference $5.00 per
share ($2,500,210); 500,042 shares issued at September 30, 2006 and June 30, 2006, respectively
    
    
    5
    
    
    
    5Common stock  $0.01 par value; 10,000,000 shares authorized, 2,512,284 and 2,491,014 shares
issued as of September 30, 2006 and June 30, 2006, respectively
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    6,011
    
    
    
    5,959Retained deficit
    
    
    (1,258
    )
    
    
    (258
    )Accumulated other comprehensive loss
    
    
    (134
    )
    
    
    (272
    )Less treasury stock, at cost; 25,000 common shares at September 30, 2006 and June 30, 2006, respectively
    
    
    (40
    )
    
    
    (40
    )Total stockholders equity
    
    
    4,609
    
    
    
    5,419Total liabilities and stockholders equity
    
    $
    32,212
    
    
    $
    34,243
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XPONENTIAL, INC. AND SUBSIDIARIES
 
 
 Three Months Ended
    
    
    Three Months Ended(In thousands, except per share data)
    
    September 30, 2006
    
    
    September 30, 2005Revenues:Merchandise sales
    
    $
    3,550
    
    
    $
    3,097Pawn service charges and related fee income
    
    
    1,607
    
    
    
    1,600Total revenues
    
    
    5,157
    
    
    
    4,697Cost of sales
    
    
    2,744
    
    
    
    2,348Gross profit
    
    
    2,413
    
    
    
    2,349Expenses:Store operating expenses
    
    
    1,548
    
    
    
    1,518Corporate administrative expenses
    
    
    685
    
    
    
    696Depreciation and amortization
    
    
    86
    
    
    
    104Total expenses
    
    
    2,319
    
    
    
    2,318Operating income
    
    
    94
    
    
    
    31Interest and dividend income
    
    
    238
    
    
    
    115Interest expense including Series A preferred dividends of $54 and $61
for the three months ended September 30, 2006 and 2005, respectively
    
    
    (588
    )
    
    
    (348
    )Gain (loss) on futures contracts
    
    
    52
    
    
    
    (66
    )Gain on investments
    
    
    80
    
    
    
    1Loss from American IronHorse Motorcycle Company, Inc.
    
    
    (407
    )
    
    
    Net loss before taxes and cumulative effect of change in accounting principle
    
    
    (531
    )
    
    
    (267
    )Income tax benefit
    
    
    
    
    
    
    (70
    )Net loss before cumulative effect of change in accounting principle
    
    
    (531
    )
    
    
    (197
    )Cumulative effect of change in accounting principle (Note 10)
    
    
    (438
    )
    
    
    Net loss
    
    
    (969
    )
    
    
    (197
    )Preferred stock dividend requirement
    
    
    (31
    )
    
    
    (31
    )Net loss allocable to common stockholders
    
    $
    (1,000
    )
    
    $
    (228
    )Net loss per common share (Note 6):Basic and Diluted -Net loss before cumulative effect of change in accounting principle
    
    $
    (0.22
    )
    
    $
    (0.10
    )Cumulative effect of change in accounting principle
    
    
    (0.18
    )
    
    
    Net Loss per common share
    
    $
    (0.40
    )
    
    $
    (0.10
    )
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XPONENTIAL, INC. AND SUBSIDIARIES
 
 
 For the
    
    
    For theThree Months Ended
    
    
    Three Months Ended(In thousands)
    
    September 30, 2006
    
    
    September 30, 2005Cash flows from operating activities:Net loss
    
    $
    (969
    )
    
    $
    (197
    )Adjustments to reconcile net income to net cash used in operating
activities:Cumulative effect of change in accounting principle
    
    
    438
    
    
    
    Depreciation and amortization
    
    
    88
    
    
    
    104Non cash compensation expense
    
    
    6
    
    
    
    Gain on sale of investments
    
    
    (81
    )
    
    
    (1
    )Non cash loss from American IronHorse Motorcycle Company, Inc
    
    
    407
    
    
    
    Deferred income tax benefit related to bankruptcy
    
    
    
    
    
    
    (70
    )Non-cash interest expense
    
    
    
    
    
    
    14Amortization of debt issue costs
    
    
    51
    
    
    
    27Changes in operating assets and liabilities:Accounts receivable
    
    
    148
    
    
    
    (145
    )Pawn service charges receivable
    
    
    50
    
    
    
    30Inventories, net
    
    
    (405
    )
    
    
    (1,285
    )Prepaid expenses and other current assets
    
    
    (76
    )
    
    
    21Accounts payable and accrued liabilities
    
    
    47
    
    
    
    (157
    )Net cash used in operating activities
    
    
    (296
    )
    
    
    (1,659
    )Cash flows from investing activities:Pawn loans made
    
    
    (4,176
    )
    
    
    (4,596
    )Pawn loans redeemed
    
    
    1,767
    
    
    
    1,712Inventory acquired from loan forfeitures
    
    
    2,868
    
    
    
    3,162Proceeds from sale of investments
    
    
    910
    
    
    
    Purchase of investments
    
    
    (780
    )
    
    
    (709
    )Purchases of property and equipment
    
    
    (160
    )
    
    
    (484
    )Other assets
    
    
    (30
    )
    
    
    20Net cash provided by (used in) investing activities
    
    
    399
    
    
    
    (895
    )Cash flows from financing activities:Borrowings on notes payable
    
    
    2,945
    
    
    
    4,205Principal payments on notes payable
    
    
    (4,207
    )
    
    
    (3,787
    )Convertible note offering proceeds
    
    
    12
    
    
    
    2,724Convertible note offering costs
    
    
    (1
    )
    
    
    (251
    )Proceeds from issuance of common stock
    
    
    34
    
    
    
    Dividends paid
    
    
    (31
    )
    
    
    (31
    )Net cash provided by (used in) financing activities
    
    
    (1,248
    )
    
    
    2,860Net increase (decrease) in cash and cash equivalents
    
    
    (1,145
    )
    
    
    306Cash and cash equivalents at beginning of period
    
    
    1,932
    
    
    
    407Cash and cash equivalents at end of period
    
    $
    787
    
    
    $
    713Supplemental disclosures of cash flow information 
Cash paid for interest
    
    $
    511
    
    
    $
    288
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XPONENTIAL, INC. AND SUBSIDIARIES
 
   (1)
    
    Basis of Presentation
      (2)
    
    Recent Accounting Pronouncements
    6




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XPONENTIAL, INC. AND SUBSIDIARIES
 
 (3)
    
    Notes PayableRevolving Credit Facility-PawnMart currently has a revolving credit facility with FCC, LLC, d/b/a First Capital,
Kennesaw, Georgia (the  Lender), in an amount up to $4,500,000, which bears interest at
the prevailing prime rate plus 2.0% (10.25% at September 30, 2006), and matures on June 17,
2007 (the Credit Facility). The Credit Facility is an asset-based loan with advances
thereunder based on PawnMarts eligible accounts receivable and inventory. The Credit Facility is collateralized by substantially all of the unencumbered assets of
PawnMart and is guaranteed by the Company. The Company is required to maintain certain
financial ratios and comply with certain covenants, including a prohibition against paying
cash dividends on its common stock unless specifically approved by the Lender. At September
30, 2006, $787,000 was outstanding under the Credit Facility and an additional $2,420,000
was available to borrow pursuant to the available borrowing base. The Company was in
compliance with the financial ratios and other covenants under the Credit Facility at
September 30, 2006.8% Limited Recourse Convertible Notes-
  (4)
    
    Equity
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XPONENTIAL, INC. AND SUBSIDIARIES
 
 (5)
    
    Stock Option Plan, Stock Incentive Plan and Stock Purchase Plan
   Weighted AverageNumber of
    
    
    ExerciseOptions
    
    
    PriceOutstanding at June 30, 2004
    
    
    206,000
    
    
    $
    1.09Granted
    
    
    20,000
    
    
    
    1.56Exercised
    
    
    (2,000
    )
    
    
    1.00Forfeited
    
    
    (4,000
    )
    
    
    1.00Outstanding and exercisable at June 30, 2005
    
    
    220,000
    
    
    
    1.13Granted
    
    
    40,000
    
    
    
    2.90Exercised
    
    
    (40,000
    )
    
    
    1.00Forfeited
    
    
    
    
    
    
    Outstanding and exercisable at June 30, 2006
    
    
    220,000
    
    
    
    1.48Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding and exercisable at September 30, 2006
    
    
    220,000
    
    
    $
    1.48
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XPONENTIAL, INC. AND SUBSIDIARIES
 
   (6)
    
    Weighted Average Shares and Net Income Per Common Share
   Net LossAllocable toFor the Three Months Ended
    
    CommonSeptember 30, 2006
    
    Shareholders
    
    
    Shares
    
    
    Per ShareBasic and diluted loss per common share before
dividend and cumulative effect of change in
accounting principle
    
    $
    (531,000
    )Preferred stock dividend
    
    
    (31,000
    )Basic and diluted loss per common share before
cumulative
effect of change in accounting principle
    
    
    (562,000
    )
    
    
    2,511,590
    
    
    $
    (0.22
    )Cumulative effect of change in accounting principle
    
    
    (438,000
    )
    
    
    2,511,590
    
    
    
    (0.18
    )Net loss per common share
    
    $
    (1,000,000
    )
    
    
    2,511,590
    
    
    $
    (0.40
    )Net LossAllocable toFor the Three Months Ended
    
    CommonSeptember 30, 2006
    
    Shareholders
    
    
    Shares
    
    
    Per ShareBasic and diluted loss per common share
    
    $
    (228,000
    )
    
    
    2,380,804
    
    
    $
    (0.10
    )
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XPONENTIAL, INC. AND SUBSIDIARIES
 
 (7)
    
    Investments in Marketable Securities
   (in thousands)
    
    Cost
    
    
    Unrealized Gain/(Loss)
    
    
    Market ValueStocks:Integrity Mutual Funds Inc.
    
    $
    749
    
    
    $
    65
    
    
    $
    814Other
    
    
    7
    
    
    
    (7
    )
    
    
    756
    
    
    
    58
    
    
    
    814Bonds, maturing in:2008
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    100
    
    
    
    (5
    )
    
    
    952010
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    8,693
    
    
    
    (186
    )
    
    
    8,5078,793
    
    
    
    (191
    )
    
    
    8,602Total
    
    $
    9,549
    
    
    $
    (133
    )
    
    $
    9,416
  (in thousands)
    
    Cost
    
    
    Unrealized Gain/(Loss)
    
    
    Market ValueStocks:Integrity Mutual
Funds, Inc.
    
    $
    645
    
    
    $
    (59
    )
    
    $
    586Other
    
    
    7
    
    
    
    (7
    )
    
    
    652
    
    
    
    (66
    )
    
    
    586Bonds, maturing in:2008
    
    
    115
    
    
    
    14
    
    
    
    1292009
    
    
    352
    
    
    
    15
    
    
    
    3672010
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    8,479
    
    
    
    (234
    )
    
    
    8,2458,946
    
    
    
    (205
    )
    
    
    8,741Total
    
    $
    9,598
    
    
    $
    (271
    )
    
    $
    9,327
 (8)
    
    Derivative Instruments
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XPONENTIAL, INC. AND SUBSIDIARIES
 
 (9)
    
    Comprehensive Income
  For the Three Month
    
    
    For the Three MonthPeriod Ended
    
    
    Period Ended(in thousands)
    
    September 30, 2006
    
    
    September 30, 2005Net loss
    
    $
    (531
    )
    
    $
    (197
    )Unrealized (gain) loss from available for sale securities
    
    
    181
    
    
    
    (79
    )Reclassification of realized (gain) loss included in net
income
    
    
    (43
    )
    
    
    65Comprehensive loss
    
    $
    (393
    )
    
    $
    (211
    )
 (10)
    
    Investment in American IronHorse Motorcycle Company, Inc.
   2006
    
    
    2005
    
    
    2004Investment in American IronHorse as of fiscal years
ended June 30, 2004, 2005 and 2006  cost basis
    
    $
    6,451
    
    
    $
    4,835
    
    
    $
    3,018Add: % share of net income (loss) from American
IronHorse for fiscal years ended June 30, 2004, 2005
and 2006
    
    
    (639
    )
    
    
    220
    
    
    
    ( 19
    )Add: cumulative net income (loss) prior fiscal years
    
    
    201
    
    
    
    (19
    )
    
    
    Cumulative adjustment due to change to equity method
    
    
    (438
    )
    
    
    201
    
    
    
    (19
    )Investment at end of each fiscal year under equity method
    
    $
    6,013
    
    
    $
    5,036
    
    
    $
    2,999
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XPONENTIAL, INC. AND SUBSIDIARIES
 
 (10)
    
    Investment in American IronHorse Motorcycle Company, Inc. (continued)
  As of
    
    
    As ofSeptember 30, 2006
    
    
    June 30, 2006(in thousands)
    
    (Unaudited)
    
    
    (Unaudited)Current assets
    
    $
    30,183
    
    
    $
    30,064Current liabilities
    
    
    25,703
    
    
    
    23,611Total assets
    
    $
    33,699
    
    
    $
    33,909Total liabilities
    
    
    25,895
    
    
    
    23,803Stockholders equity
    
    $
    7,804
    
    
    $
    10,106
 For the
    
    
    For theThree Months Ended
    
    
    Three Months EndedSeptember 30, 2006
    
    
    September 30, 2005(in thousands)
    
    (Unaudited)
    
    
    (Unaudited)Total revenue
    
    $
    12,681
    
    
    $
    24,460Net income (loss)
    
    $
    (2,303
    )
    
    $
    798
 (11)
    
    Investment in Integrity Mutual Funds, Inc
  (12)
    
    Operating Segment Information
  12




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XPONENTIAL, INC. AND SUBSIDIARIES
 
 (12)
    
    Operating Segment Information (continued)
  Investment,Management andThree Months Ended September 30, 2006
    
    Pawn Lending
    
    
    Advisory Services
    
    
    ConsolidatedRevenue:Merchandise sales
    
    $
    3,550
    
    
    $
    
    
    
    $
    3,550Pawn service charges and related fee income
    
    
    1,607
    
    
    
    
    
    
    
    1,607Total RevenueTotal revenues
    
    
    5,157
    
    
    
    
    
    
    
    5,157Expenses:Cost of sales
    
    
    2,744
    
    
    
    
    
    
    
    2,744Store operating expenses
    
    
    1,548
    
    
    
    
    
    
    
    1,548Corporate administrative expenses
    
    
    497
    
    
    
    188
    
    
    
    685Depreciation and amortization
    
    
    71
    
    
    
    15
    
    
    
    86Operating income (loss)
    
    
    297
    
    
    
    (203
    )
    
    
    94Interest and dividend income
    
    
    4
    
    
    
    233
    
    
    
    237Interest expense
    
    
    (48
    )
    
    
    (540
    )
    
    
    (588
    )Gain on change of futures contracts value
    
    
    52
    
    
    
    
    
    
    
    52Gain on sale of marketable securities
    
    
    
    
    
    
    81
    
    
    
    81Loss from American IronHorse
    
    
    
    
    
    
    (407
    )
    
    
    (407
    )Net income (loss) before taxes and cumulative effect of change in accounting principle
    
    $
    305
    
    
    $
    (836
    )
    
    $
    (531
    )Total Assets
    
    $
    12,126
    
    
    $
    20,086
    
    
    $
    32,212
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XPONENTIAL, INC. AND SUBSIDIARIES
 
 (12)
    
    Operating Segment Information (continued)
 Investment,Pawn
    
    
    Management andFor the Three Months Ended September 30, 2005
    
    Lending
    
    
    Advisory Services
    
    
    ConsolidatedRevenue:Merchandise sales
    
    $
    3,097
    
    
    $
    
    
    
    $
    3,097Pawn service charges and related fee income
    
    
    1,600
    
    
    
    
    
    
    
    1,600Total Revenue
    
    
    4,697
    
    
    
    
    
    
    
    4,697Expenses:Cost of sales
    
    
    2,348
    
    
    
    
    
    
    
    2,348Store operating expenses
    
    
    1,518
    
    
    
    
    
    
    
    1,518Corporate administrative expenses
    
    
    474
    
    
    
    222
    
    
    
    696Depreciation and amortization
    
    
    104
    
    
    
    
    
    
    
    104Operating income (loss)
    
    
    253
    
    
    
    (222
    )
    
    
    31Interest and dividend income
    
    
    
    
    
    
    115
    
    
    
    115Interest expense
    
    
    (53
    )
    
    
    (295
    )
    
    
    (348
    )Loss on futures contracts value
    
    
    (66
    )
    
    
    
    
    
    
    (66
    )Gain on sale of marketable securities
    
    
    
    
    
    
    1
    
    
    
    1Net income (loss) before taxes
    
    $
    134
    
    
    $
    (401
    )
    
    $
    (267
    )Total Assets
    
    $
    12,562
    
    
    $
    12,336
    
    
    $
    24,898
 (13)
    
    Subsequent Events
   14




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 Statements appearing in the following discussion that are not historical facts are
forward-looking statements (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, which are intended to be covered by the safe harbors created by those sections. Such
forward-looking statements are necessarily estimates reflecting the best judgment of the Companys
management based upon current information and involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such risks, uncertainties and other
factors, include, but are not limited to, those set forth and those appearing from time to time in
filings made by the Company with the Securities and Exchange Commission. These risks,
uncertainties and other factors should not be construed as exhaustive and the Company does not
undertake, and specifically disclaims any obligation, to update any forward-looking statements to
reflect occurrences or unanticipated events or circumstances after the date of such statements.
 In addition, the following discussion and analysis should be read in conjunction with the
Companys financial statements and notes thereto and other financial data included in the Companys
Form 10-KSB for the fiscal year ended June 30, 2006.
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##### Table of Contents



For the
    
    For theThree Months Ended
    
    Three Months EndedSeptember 30, 2006
    
    September 30, 2005Merchandise sales
    
    
    68.8
    %
    
    
    65.9
    %Pawn service charges and related fee income
    
    
    31.2
    
    
    
    34.1Management advisory fees and related fee income
    
    
    
    
    
    
    Total revenues
    
    
    100.0
    
    
    
    100.0Cost of sales
    
    
    53.2
    
    
    
    50.0Store operating expenses
    
    
    30.0
    
    
    
    32.3Corporate administrative expenses
    
    
    13.3
    
    
    
    14.8Depreciation and amortization
    
    
    1.7
    
    
    
    2.2Operating income
    
    
    1.8
    
    
    
    0.7Interest and dividend income
    
    
    4.6
    
    
    
    2.4Interest expense
    
    
    (11.4
    )
    
    
    (7.4
    )Gain on sale of marketable securities
    
    
    1.6
    
    
    
    Gain (loss) on futures contracts
    
    
    1.0
    
    
    
    (1.4
    )Loss from American IronHorse
    
    
    (7.9
    )
    
    
    Net loss before income taxes and cumulative effect of change in accounting principle
    
    
    (10.3
    )
    
    
    (5.7
    )Income tax benefit
    
    
    
    
    
    
    1.5Net loss before cumulative effect of change in accounting principle
    
    
    (10.3
    )
    
    
    (4.2
    )Cumulative effect of change in accounting principle
    
    
    (8.5
    )
    
    
    Net loss
    
    
    (18.8
    )%
    
    
    (4.2
    )%
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Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2005
            17




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ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
 Competition
  18




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Government Regulation
  Risks Related to Improper Assessment of the Pledged Propertys Estimated Resale Value
  Interest Rate Risk
   Risks Related to Automobile Title Loans
  
 ITEM 4. CONTROLS AND PROCEDURES
   19




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##### Table of Contents



PART
II  OTHER INFORMATION
 
 ITEM 6. EXHIBITS
 Number
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant
to Rule 13a-14(a) or 15d-14(a) under the Securities
Exchange Act of 1934, as amended *31.2
    
    Certification of Chief Financial Officer pursuant
to Rule 13a-14(a) or 15d-14(a) under the Securities
Exchange Act of 1934, as amended *32.1
    
    Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 *32.2
    
    Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 *
 
 *
    
    Filed herewith. 20




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##### Table of Contents



SIGNATURES
  XPONENTIAL, INC. (Registrant)November 13, 2006
    
    By:
    
    /s/ Robert W. SchleizerRobert W. Schleizer, Executive VicePresident and Chief Financial Officer
 21




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant
to Rule 13a-14(a) or 15d-14(a) under the Securities
Exchange Act of 1934, as amended31.2
    
    Certification of Chief Financial Officer pursuant
to Rule 13a-14(a) or 15d-14(a) under the Securities
Exchange Act of 1934, as amended32.1
    
    Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002