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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

|ý                                                 | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|------------------------------------------------- | ----------------------------------------------------------------------------------
|For the Quarterly Period Ended September 00, 0000
|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

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PawnMart, Inc.(Exact name of small business issuer as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                             |  | 75-2520896(I.R.S. Employer Identification No.)
|-------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|2175 Old Concord Road SE, Suite 200, Smyrna, Georgia 30080(Address of principal executive offices)

(678) 305-7211(Issuer's telephone number)

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Check
whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of securities under a plan
confirmed by a court. Yes ý    No o

The
Company has 2,079,948 shares of Common Stock, par value $0.01 per share, outstanding as of October 31, 2002.

Transitional
Small Business Disclosure Format (Check
one): Yes o    No ý

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PAWNMART, INC.  INDEX

|FINANCIAL INFORMATIONPART I                                     |                                                                                                                                               | Page
No.
|---------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | --------
|Item 1 Financial Statements                                      |                                                                                                                                               |         
|                                                                 | Balance Sheet as of September 30, 2002 and June 30, 2002                                                                                      |         
|                                                                 | Statements of Operations for the Three Months Ended October 6, 2001, Two Months Ended August 31, 2002, and One Month Ended September 30, 2002 |         
|                                                                 | Statements of Cash Flows for the Three Months Ended October 6, 2001, Two Months Ended August 31, 2002, and One Month Ended September 30, 2002 |         
|                                                                 | Notes to Financial Statements                                                                                                                 |         
|Item 2 Management's Discussion and Analysis or Plan of Operation |                                                                                                                                               | 14      
|Item 3 Controls and Procedures                                   |                                                                                                                                               | 17      
|PART II  OTHER INFORMATION                                      |                                                                                                                                               |         
|Item 1 Legal Proceedings                                         |                                                                                                                                               | 17      
|Item 2 Changes in Securities                                     |                                                                                                                                               | 17      
|Item 3 Defaults Upon Senior Securities                           |                                                                                                                                               | 17      
|Item 4 Submission of Matters to a Vote of Security Holders       |                                                                                                                                               | 17      
|Item 5 Other Information                                         |                                                                                                                                               | 17      
|Item 6 Exhibits and Reports on Form 8-K                          |                                                                                                                                               | 18      

2

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PAWNMART, INC.  Balance Sheets  (In thousands, except share and per share data)

|                                                                                                                                                |                                                                                                                                                                                  | Reorganized
Company
September 30, 2002                           |                           | Predecessor
June 30, 2002 |  
|----------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------- | ------------------------- | -
|
|Assets                                                                                                                                          |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Current assets:                                                                                                                                 |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                | Cash and cash equivalents                                                                                                                                                        |                                                                  | $                         | 2,026                     |  
|                                                                                                                                                | Accounts receivable                                                                                                                                                              |                                                                  |                           | 94                        |  
|                                                                                                                                                | Pawn service charges receivable                                                                                                                                                  |                                                                  |                           | 399                       |  
|                                                                                                                                                | Pawn loans                                                                                                                                                                       |                                                                  |                           | 3,628                     |  
|                                                                                                                                                | Inventories, net                                                                                                                                                                 |                                                                  |                           | 2,508                     |  
|                                                                                                                                                | Prepaid expenses and other current assets                                                                                                                                        |                                                                  |                           | 152                       |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  | Total current assets      |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Property and equipment, net                                                                                                                     |                                                                                                                                                                                  |                                                                  | 720                       |                           |  
|Debt issuance costs, net                                                                                                                        |                                                                                                                                                                                  |                                                                  |                          |                           |  
|Other assets, net including available for sale securities at September 30, 2002 of $5,213                                                       |                                                                                                                                                                                  |                                                                  | 5,414                     |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  | Total assets              |                           | $
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Liabilities and Stockholders' Equity/ Deficit)                                                                                                  |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Current liabilities:                                                                                                                            |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                | Accounts payable and accrued liabilities                                                                                                                                         |                                                                  | $                         | 677                       |  
|                                                                                                                                                | Current installments of notes payable  prepetition taxes                                                                                                                        |                                                                  |                           | 100                       |  
|                                                                                                                                                | Prepetition liabilities                                                                                                                                                          |                                                                  |                           |                          |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  | Total current liabilities |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Long term debt                                                                                                                                  |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Notes payableprepetition taxes, net of current portion                                                                                         |                                                                                                                                                                                  |                                                                  | 467                       |                           |  
|Notes payablebank line of credit                                                                                                               |                                                                                                                                                                                  |                                                                  | 3,989                     |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  | Total liabilities         |                           |  
|Redeemable Preferred Stock:                                                                                                                     |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                | Preferred stockSeries A; par value $0.01; 5% cumulative dividend, liquidation preference $5.00 per share; 1,071,636 shares issued at September 30, 2002                         |                                                                  |                           | 5,358                     |  
|Stockholders' equity/(deficit):                                                                                                                 |                                                                                                                                                                                  |                                                                  |                           |                           |  
|                                                                                                                                                | Preferred stock  $0.01 par value, 2,500,000 authorized:                                                                                                                         |                                                                  |                           |                           |  
|                                                                                                                                                |                                                                                                                                                                                  | Preferred stock  Series B; 500,042 issued at September 30, 2002 |                           |                           | 5
|                                                                                                                                                | 8% Convertible preferred stock (old), $6.00 par value, authorized 416,667 shares; 416,667 shares issued and outstanding at June 30, 2002: liquidation preference $6.00 per share |                                                                  |                           |                          |  
|Common stock $0.01 par value; authorized 10,000,000 shares, 2,079,948 issued and outstanding as of September 30, 2002                           |                                                                                                                                                                                  |                                                                  | 21                        |                           |  
|Common stock (old), $0.01 par value; authorized 20,000,000 shares, 2,503,412 issued and outstanding as of June 30, 2002                         |                                                                                                                                                                                  |                                                                  |                          |                           |  
|Series A redeemable common stock (old) purchase warrants, $0.125 par value; 1,974,060 warrants issued and outstanding at June 30, 2002 (note 2) |                                                                                                                                                                                  |                                                                  |                          |                           |  
|Series B redeemable Common Stock (old) purchase warrants, $0.0625 par value; 1,380,000 warrants issued and outstanding at June 30, 2002         |                                                                                                                                                                                  |                                                                  |                          |                           |  
|Additional common stock purchase warrants                                                                                                       |                                                                                                                                                                                  |                                                                  |                          |                           |  
|                                                                                                                                                | Additional paid-in capital                                                                                                                                                       |                                                                  |                           | 4,345                     |  
|                                                                                                                                                | Accumulated deficit                                                                                                                                                              |                                                                  |                           | (196                      | )
|Other comprehensive income                                                                                                                      |                                                                                                                                                                                  |                                                                  | 175                       |                           |  
|Less treasury stock, at cost; 7,144 common shares (old) at June 30, 2002                                                                        |                                                                                                                                                                                  |                                                                  |                          |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Total stockholders' equity/(deficit)                                                                                                            |                                                                                                                                                                                  |                                                                  | 9,708                     |                           |  
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  
|Total liabilities and stockholders' equity/(deficit)                                                                                            |                                                                                                                                                                                  | $                                                                | 14,941                    |                           | $
|                                                                                                                                                |                                                                                                                                                                                  |                                                                  |                           |                           |  

See accompanying notes to financial statements.

3

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PAWNMART, INC. AND SUBSIDIARIES  Statements of Operations  (Unaudited)  (In thousands, except per share data)

|                                                   |                        |   |       |   |   | Reorganized Company |       
|-------------------------------------------------- | ---------------------- | - | ----- | - | - | ------------------- | ------
|
|
|
|Revenues:                                          |                        |   |       |   |   |                     |       
|Merchandise sales                                  |                        | $ | 3,754 |   | $ | 1,578               |       
|Pawn service charges                               |                        |   | 1,408 |   |   | 853                 |       
|Other                                              |                        |   | 101   |   |   | 38                  |       
|                                                   |                        |   |       |   |   |                     |       
|Total revenues                                     |                        |   | 5,263 |   |   | 2,469               |       
|Cost of sales                                      |                        |   | 3,028 |   |   | 1,075               |       
|                                                   |                        |   |       |   |   |                     |       
|Gross profit                                       |                        |   | 2,235 |   |   | 1,394               |       
|                                                   |                        |   |       |   |   |                     |       
|Expenses:                                          |                        |   |       |   |   |                     |       
|Store operating expenses                           |                        |   | 1,671 |   |   | 896                 |       
|Corporate administrative expenses                  |                        |   | 532   |   |   | 336                 |       
|Interest expense                                   |                        |   | 179   |   |   | 83                  |       
|Depreciation and amortization                      |                        |   | 123   |   |   | 63                  |       
|                                                   |                        |   |       |   |   |                     |       
|Total expenses                                     |                        |   | 2,505 |   |   | 1,378               |       
|                                                   |                        |   |       |   |   |                     |       
|Operating income/(loss)                            |                        |   | (270  | ) |   | 16                  |       
|Reorganization expenses                            |                        |   | 138   |   |   | 241                 |       
|Extraordinary items:                               |                        |   |       |   |   |                     |       
|                                                   | Gain on debt discharge |   |       |  |   |                     | 11,810
|Preferred stock dividend requirement               |                        |   |      |   |   |                    |       
|                                                   |                        |   |       |   |   |                     |       
|Dividends Paid                                     |                        |   |      |   |   |                    |       
|                                                   |                        |   |       |   |   |                     |       
|Net income/(loss) allocable to common stockholders |                        | $ | (408  | ) | $ | 11,585              |       
|                                                   |                        |   |       |   |   |                     |       
|Loss per common share (note 3):                    |                        |   |       |   |   |                     |       
|Basic and diluted                                  |                        | $ | *     |   | $ | *                   |       
|                                                   |                        |   |       |   |   |                     |       

*
Loss per share prior to Plan consummation and merger are not meaningful.

See
accompanying notes to financial statements.

4

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PAWNMART, INC. AND SUBSIDIARIES  Statements of Cash Flows  (Unaudited)  (In thousands)

|                                                     |                                                                          | Predecessor
Three
Months
Ended
October 6,
2001                             |                                                                   | Predessor
Two Months
Ended
August 31,
2002          |     | Reorganized
Company
One Month
Ended
September 30,
2002 |        | Three
Months
Ended
September 30,
2002 |      
|---------------------------------------------------- | ------------------------------------------------------------------------ | -------------------------------------------------------------------------- | ----------------------------------------------------------------- | --------------------------------------------------- | --- | ------------------------------------------------------ | ------ | ------------------------------------- | -----
|Cash flows from operating activities:                |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     | Net income/(loss)                                                        |                                                                            | $                                                                 | (408                                                | )   | $                                                      | 11,585 |                                       | $    
|                                                     | Adjustments to reconcile net loss to net cash used operating activities: |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     |                                                                          | Depreciation and amortization                                              |                                                                   |                                                     | 123 |                                                        |        | 63                                    |      
|                                                     |                                                                          | Amortization of debt issuance costs                                        |                                                                   |                                                     | 24  |                                                        |        |                                      |      
|                                                     |                                                                          | Gain on debt discharge                                                     |                                                                   |                                                     |    |                                                        |        | (11,810                               | )    
|                                                     |                                                                          | Changes in operating assets and liabilities, net of effect of acquisition: |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     |                                                                          |                                                                            | Accounts receivable                                               |                                                     |     | (18                                                    | )      |                                       | (24  
|                                                     |                                                                          |                                                                            | Pawn service charges receivable                                   |                                                     |     | 162                                                    |        |                                       | (45  
|                                                     |                                                                          |                                                                            | Net decrease/(increase) in pawn loans                             |                                                     |     | 1,656                                                  |        |                                       | (414 
|                                                     |                                                                          |                                                                            | Inventories, net                                                  |                                                     |     | (281                                                   | )      |                                       | 62   
|                                                     |                                                                          |                                                                            | Prepaid expenses and other current assets                         |                                                     |     | (264                                                   | )      |                                       | (3   
|                                                     |                                                                          |                                                                            | Other assets                                                      |                                                     |     |                                                       |        |                                       |     
|                                                     |                                                                          |                                                                            | Prepetition liabilities, accounts payable and accrued liabilities |                                                     |     | 193                                                    |        |                                       | (56  
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     |                                                                          |                                                                            |                                                                   | Net cash provided by operating activities           |     |                                                        | 1,187  |                                       |      
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|Cash flows from investing activities:                |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     | Cash acquired in merger(1)                                               |                                                                            |                                                                   |                                                    |     |                                                        |       |                                       |      
|Purchases of property and equipment                  |                                                                          |                                                                            | (14                                                               | )                                                   |     |                                                       |        |                                       | (69  
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     |                                                                          |                                                                            |                                                                   | Net cash provided by (used in) investing activities |     |                                                        | (14    | )                                     |      
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|Cash flows from financing activities:                |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     | (Principal payments)/borrowings on notes payable                         |                                                                            |                                                                   | (1,534                                              | )   |                                                        | 455    |                                       |      
|                                                     | Unrealized gain on investments                                           |                                                                            |                                                                   |                                                    |     |                                                        |       |                                       |      
|                                                     | Dividends paid                                                           |                                                                            |                                                                   |                                                    |     |                                                        |       |                                       |      
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     |                                                                          |                                                                            |                                                                   | Net cash provided by (used in) financing activities |     |                                                        | (1,534 | )                                     |      
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|Net increase (decrease) in cash and cash equivalents |                                                                          |                                                                            | (361                                                              | )                                                   |     | (187                                                   | )      |                                       | 1,836
|Cash and cash equivalents at beginning of period     |                                                                          |                                                                            | 811                                                               |                                                     |     | 377                                                    |        |                                       | 190  
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|Cash and cash equivalents at end of period           |                                                                          | $                                                                          | 450                                                               |                                                     | $   | 190                                                    |        | $                                     | 2,026
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|Supplemental disclosures of cash flow information   |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      
|                                                     | Cash paid for interest                                                   |                                                                            | $                                                                 | 179                                                 |     | $                                                      | 83     |                                       | $    
|                                                     |                                                                          |                                                                            |                                                                   |                                                     |     |                                                        |        |                                       |      

See
accompanying notes to financial statements.

5

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PAWNMART, INC. AND SUBSIDIARIES  Notes to Financial Statements  (Unaudited)

(1) Basis of Presentation

The accompanying financial statements have been prepared in accordance with the American Institute of Certified Public Accountants Statement of Position
90-7: "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7") and generally accepted accounting principles for interim financial information
and therefore do not include all disclosures necessary for complete financial statements. In the opinion of management, all adjustments have been made that are necessary for a fair presentation of the
financial position and results of operations as of and for the periods presented.

The
Board of Directors of the Company determined in May 2002 that it was in the Company's best interest to change its fiscal year end from the Saturday nearest January 31
to June 30 to more accurately reflect the Company's post bankruptcy operating results. The results of operations for the interim periods ended September 30, 2002 and October 6,
2001 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

The
financial statements should be read in conjunction with the financial statements for the fiscal year ended February 2, 2002 included in the Company's
Form 10-K which has been previously filed with the Securities and Exchange Commission.

PawnMart, Inc.
(the "Company"), was incorporated in Delaware on January 13, 1994. The Company is a specialty finance and retail enterprise principally engaged in
establishing and operating stores which advance money secured by the pledge of tangible personal property, and buy and sell pre-owned merchandise to the value-conscious consumer. As of
September 30, 2002, the Company owned and operated 25 stores located in Georgia, North Carolina, and South Carolina.

On
July 9, 2001 (the "Petition Date"), the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division (the "Bankruptcy Court") in the case of PawnMart, Inc., Debtor, Case
No. 01-44957-BJH-11. On May 20, 2002 (the "Confirmation Date"), the Bankruptcy Court entered an order dated May 20, 2002 (the "Confirmation
Order") confirming the first amended plan of reorganization (the "Plan") filed by the Company under Chapter 11 of the United States Bankruptcy Code. The Plan became effective on May 31, 2002
(the "Effective Date").

The
Company successfully emerged from bankruptcy on August 30, 2002 when it consummated its merger (the "Merger") between the Company and C/M Holdings, Inc. ("CMHI"). The
reorganized Company adopted fresh-start reporting (Note 2) and gave effect to its emergence from bankruptcy and consummation of the Plan on August 30, 2002, including recognition of
certain reorganization expenses associated with the Merger in the Company's Statement of Operations for the two months ended August 31, 2002.

Fresh-start
reporting as set forth in SOP 90-7 requires that the reorganized Company restate its assets and liabilities to reflect their reorganization value, which
approximates fair value at the date of the reorganization. In so restating, SOP 90-7 required the reorganized Company to allocate its reorganization value to its assets based upon their
estimated fair value. Each liability existing on the Confirmation Date is to be stated at the present value of amounts to be paid, determined using the appropriate discount rate.

6

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The
fresh-start reporting reorganization value of approximately $7.6 million resulted in a net value of approximately $1.9 million to the new common equity holders after
allowance for post confirmation liabilities of the reorganized Company of $5.8 million. The reorganization value was determined in consideration of several factors and by reliance on various
valuation methods including discounting cash flow, book value multiples of comparable companies in its industry, net realizable value of asset sales and other applicable methods. The calculated
reorganization value was based on a estimates and assumptions about circumstances in a relatively high-risk investment scenario that have not yet taken place in which there are significant
economic and competitive uncertainties beyond the control of the reorganized Company.

Management
believes the reorganized Company has sufficient liquidity and capital resources to meet its financial obligations, make planned capital expenditures and debt payments as a
result of the Merger. Future operating performance and expected cash flows will be subject to financial, economic and other factors affecting the business and operations beyond its control and will
affect the Company's ability to expand its business anticipated in its financial plan.

The
information set forth in these financial statements is unaudited. In the opinion of management, the information reflects all adjustments, which consist of normal recurring accruals,
that are necessary to present a fair statement of results of operations of the Company for the interim periods presented. The operating results for the one month ended September 30, 2002 and
other periods presented are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2003.

(2) Plan of Reorganization



In the Chapter 11 proceedings, substantially all liabilities as of the Petition Date were subject to compromise under the Plan that was confirmed by the
Bankruptcy Court. Treatment of each class of claims is explained in detail in the Company's Form 10-K for the fiscal year ended February 2, 2002.

Under
the terms of the Plan, the Company cancelled all equity interests of its common and preferred shareholders and interests of any holders of options or warrants. The Company issued
2,079,948 shares of Common Stock to its unsecured creditors in exchange for indebtedness and in connection with the Merger of the Company with CMHI, which is owned in part by Dwayne A. Moyers and
Jeffrey A. Cummer, directors of the Company, issued 1,071,636 shares of Series A Preferred Stock and 500,042 Series B Preferred Stock to the former shareholders of CMHI.

The
Company is paying the prepetition priority tax claims over a six year period from the assessment date with interest at 7% per annum in quarterly installments of approximately $35,000
in accordance with the Plan.

The
Bankruptcy Court confirmed Company's Plan on May 20, 2002 with an Effective Date of May 31, 2002. The consummation of the Plan was contingent on several material events
including consummation of the Merger which occurred on August 30, 2002 which is reported herein as a material business combination.

The
Company acquired 100 percent of the outstanding common stock of CMH on August 30, 2002. The results of CMHI's operations have been included in the financial statements
since the date of the Merger.

The
Company's reorganization value, computed immediately before the Merger, was $7,567,000.

7

---

The
Company adopted fresh-start reporting because holders of existing voting shares immediately before filing and confirmation of the Plan received less than 50% of the voting shares of
the emerging entity; (all pre-confirmation equity interests were cancelled), and the reorganization value is less than the postpetition liabilities and allowed claims, as shown below:

|                                                            |  | (in thousands)
|----------------------------------------------------------- |  | --------------
|Postpetition current liabilities                            |  | $             
|Liabilities deferred pursuant to the Plan                   |  |               
|Liabilities exchanged for equity in the reorganized company |  |               
|                                                            |  |               
|Total postpetition liabilities and allowed claims           |  |               
|Reorganization value                                        |  |               
|                                                            |  |               
|Excess of liabilities over reorganization value             |  | $             
|                                                            |  |               

The
reorganization value was determined in consideration of several factors and by reliance on various valuation methods including discounting cash flow, book value multiples of
comparable companies in its industry, net realizable value of asset sales and other applicable methods. The Company assigned no value to the Company's net operating loss carryovers in the calculation
of its reorganization value due to the lack of certainty of utilizing the net operating loss based on historical operating results and the potential limitations on use resulting from the Plan.

After
consideration of the Company's debt capacity, extensive negotiations among parties in interest, projected earnings before interest and taxes, free cash flow to interest and debt
service and other capital considerations, it was agreed that the Company's organization capital structure prior to the Merger, is as follows:

|                                        |  | At August 30, 2002
|--------------------------------------- |  | ------------------
|
|Postpetition current liabilities        |  | $                 
|Notes payable  priority tax claims (1) |  |                   
|Post confirmation bank line of credit   |  |                   
|Common stock                            |  |                   
|                                        |  |                   
|                                        |  | $                 
|                                        |  |                   

---

8

---

The
effects of the Plan on the Company's balance sheet as of August 30, 2002 is as follows:

|Assets                                                    |  | Prior to Plan
Consummation |         | Debt Discharge |   | Fresh Start Adjusted |   | Reorganized Balance Sheet Prior to Merger
|--------------------------------------------------------- |  | -------------------------- | ------- | -------------- | - | -------------------- | - | -----------------------------------------
|Current assets                                            |  |                            |         |                |   |                      |   |                                          
|Cash and cash equivalents                                 |  | $                          | 190     |                | $ |                     |   | $                                        
|Receivables                                               |  |                            | 61      |                |   |                     |   |                                          
|Pawn loan receivables                                     |  |                            | 3,790   |                |   |                     |   |                                          
|Inventory -net                                            |  |                            | 2,554   |                |   |                     |   |                                          
|Prepaid expenses and other current assets                 |  |                            | 177     |                |   |                     |   |                                          
|                                                          |  |                            |         |                |   |                      |   |                                          
|Total current assets                                      |  |                            | 6,772   |                |   | 6,772                |   |                                          
|Property and equipment, net                               |  |                            | 834     |                |   |                     |   |                                          
|Debt issuance costs, net                                  |  |                            | 1,000   |                |   |                     |   |                                          
|Other assets, net                                         |  |                            | 121     |                |   |                     |   |                                          
|                                                          |  |                            |         |                |   |                      |   |                                          
|Total assets                                              |  |                            | 8,727   |                |   |                     |   |                                          
|
|Current liabilities                                       |  |                            |         |                |   |                      |   |                                          
|Accounts payable and accrued liabilities                  |  |                            | 674     |                |   |                     |   |                                          
|Notes payable  prepetition taxes, current portion        |  |                            |        |                |   | 195                  |   |                                          
|Prepetition liabilities                                   |  |                            | 12,510  |                |   | (12,510              | ) |                                          
|Notes payable  bank line of credit                       |  |                            | 3,720   |                |   | (3,720               | ) |                                          
|Notes payable                                             |  |                            | 600     |                |   |                     |   |                                          
|                                                          |  |                            |         |                |   |                      |   |                                          
|Total current liabilities                                 |  |                            | 17,504  |                |   | (16,035              | ) |                                          
|Long term debt                                            |  |                            |         |                |   |                      |   |                                          
|Notes payable  prepetition taxes, net of current portion |  |                            |        |                |   | 505                  |   |                                          
|Notes payable  bank line of credit                       |  |                            |        |                |   | 3,720                |   |                                          
|                                                          |  |                            |         |                |   |                      |   |                                          
|Total liabilities                                         |  |                            | 17,504  |                |   | (11,810              | ) |                                          
|Stockholders' equity/(deficit)                            |  |                            |         |                |   |                      |   |                                          
|Preferred stock (old)                                     |  |                            | 2,500   |                |   | (2,500               | ) |                                          
|Common stock (new)                                        |  |                            |        |                |   | 21                   |   |                                          
|Common stock (old)                                        |  |                            | 25      |                |   | (25                  | ) |                                          
|Series A redeemable Common Stock (old) purchase warrants  |  |                            | 249     |                |   | (249                 | ) |                                          
|Series B redeemable Common Stock (old)                    |  |                            | 86      |                |   | (86                  | ) |                                          
|Additional Common Stock purchase warrants                 |  |                            | 60      |                |   | (60                  | ) |                                          
|Additional paid-in capital                                |  |                            | 22,004  |                |   | 2,829                |   |                                          
|Accumulated deficit                                       |  |                            | (33,631 | )              |   | 11,810               |   |                                          
|Less treasury stock, at cost (old)                        |  |                            | (70     | )              |   | 70                   |   |                                          
|                                                          |  |                            |         |                |   |                      |   |                                          
|Total stockholders' equity/(deficit)                      |  |                            | (8,777  | )              |   | 11,810               |   |                                          
|                                                          |  |                            |         |                |   |                      |   |                                          
|Total liabilities and stockholders'equity/(deficit)       |  | $                          | 8,727   |                | $ |                     |   | $                                        
|                                                          |  |                            |         |                |   |                      |   |                                          

On
August 30, 2002, the Companyt acquired 100 percent of the outstanding common shares of C/M Holdings, Inc. ("CMHI") pursunant the Plan.

9

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The
aggregate purchase price for CMHI was approximately $7.8 million which was paid through the issuance of Series A and Series B Preferred Stock valued at
$5.3 million and $2.5 million, respectively. The value of the Preferred Stock was based on liquidation preferences and dividend and conversion features.

The
following table summarizes the estimated value of the acquired assets and liabilities assumed at the date of the Merger.

|                            |  | At August 30, 2002
|--------------------------- |  | ------------------
|
|Current assets              |  | $                 
|Property, plant & equipment |  |                   
|Other assets                |  |                   
|                            |  |                   
|Total assets acquired       |  |                   
|                            |  |                   
|Total liabilities assumed   |  |                   
|                            |  |                   
|Net assets acquired         |  | $                 
|                            |  |                   

Of
the $5.1 million in other assets, $5.0 million are investments in marketable securities. The Company has classified these securities as long term assets due to its
intent to defer sale of these securities to offset gains on disposition with accumulated net operating losses.

The
following is a condensed consolidated balance sheet August 30, 2002 (unaudited), which reflects the Merger:

|                                                  |  | PawnMart, Inc.
Reorganized
Balance Sheet
Prior to Merger |       | CMHI Assets Acquired and Liabilities Assumed as of 8/30/2002 |   | Reorganized
Balance Sheet
After Merger
|------------------------------------------------- |  | -------------------------------------------------------- | ----- | ------------------------------------------------------------ | - | --------------------------------------
|
|Assets                                            |  |                                                          |       |                                                              |   |                                       
|Current assets                                    |  | $                                                        | 6,772 |                                                              | $ | 2,725                                 
|Property and equipment, net                       |  |                                                          | 674   |                                                              |   | 36                                    
|Other assets                                      |  |                                                          | 121   |                                                              |   | 5,117                                 
|                                                  |  |                                                          |       |                                                              |   |                                       
|Total assets                                      |  | $                                                        | 7,567 |                                                              | $ | 7,878                                 
|                                                  |  |                                                          |       |                                                              |   |                                       
|Liabilities and Stockeholders' Equity/ (Deficit): |  |                                                          |       |                                                              |   |                                       
|Current Liabilities(1)                            |  | $                                                        | 1,469 |                                                              | $ | 170                                   
|Notes Payable                                     |  |                                                          | 4,225 |                                                              |   |                                      
|                                                  |  |                                                          |       |                                                              |   |                                       
|                                                  |  |                                                          | 5,694 |                                                              |   | 170                                   
|Redeemable Preferred Stock                        |  |                                                          | 5,358 |                                                              |   | 5,358                                 
|Shareholders Equity:                              |  |                                                          |      |                                                              |   |                                      
|Preferred Stock                                   |  |                                                          |      |                                                              |   | 5                                     
|Common Stock                                      |  |                                                          | 21    |                                                              |   |                                      
|Additional Paid In Capital (1)                    |  |                                                          | 1,852 |                                                              |   | 2,345                                 
|                                                  |  |                                                          |       |                                                              |   |                                       
|Total liabilities and stockholders' equity        |  | $                                                        | 7,567 |                                                              | $ | 7,878                                 
|                                                  |  |                                                          |       |                                                              |   |                                       

---

10

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(3) Notes Payable



On July 16, 2001 the Bankruptcy Court approved a $7,200,000 post-petition credit facility (the "Post-Petition Credit Facility")
with Comerica Bank ("Comerica"). The Post-Petition Credit Facility bore interest at the prevailing prime rate plus 4%. Amounts available under the Post-Petition Credit Facility
are limited to certain percentages of pawn loans, inventories, and pawn service charges receivable and is collateralized by substantially all of the unencumbered assets of the Company. The Company was
also prohibited from paying cash dividends or acquiring treasury stock under the terms of the Post-Petition Credit Facility.

The
Post-Petition Credit Facility was replaced with a new $4,500,000 credit facility (the "Post-Confirmation Credit Facility") effective September 1, 2002
upon consummation of the Plan with the completion of the Merger on August 30, 2002. The Post-Confirmation Credit Facility bears interest at the current prevailing prime rate plus 2%
and matures on January 31, 2004. Amounts available under the Post-Confirmation Credit Facility are limited to certain percentages of pawn loans, inventories, and pawn service
charges receivable. The Post-Confirmation Credit Facility is collateralized by substantially all of the unencumbered assets of the Company. At September 30, 2002, $3,988,000 was
outstanding under the Post-Confirmation Credit Facility and an additional $52,000 was available to the Company pursuant to the available borrowing base. Under the terms of the
Post-Confirmation Credit Facility, the Company is required to maintain certain financial ratios and comply with certain technical covenants. The Company was in compliance with these
requirements covenants as of September 30, 2002.



On July 16, 2001 the Bankruptcy Court approved a subordinated note in the amount of $600,000 from Hulen Pawn Shop Investors, L.L.C., which was beneficially
owned in part by Dwayne A. Moyers and Jeffrey A. Cummer, directors of the Company (the "Hulen Note"). The Hulen Note bore interest at the prevailing prime rate plus 5.0%. The Hulen Note is
collateralized by a lien subordinate to Comerica on the pawn loans, inventories and pawn loan service charges of the Company and was convertible into shares of Common Stock of the reorganized Company.
The Company paid an origination fee of $24,000. The Hulen Note was paid in full in September 2002.

On
March 11, 1999 the Company commenced a public offering of up to $10,000,000 in principal amount of 12% Subordinated Notes due December 31, 2004 (the "2004 Notes"). The
2004 Notes were offered on a "best efforts" basis by participating National Association of Securities Dealers, Inc. broker-dealers ("NASD Broker-Dealers"). Interest on the 2004 Notes was
payable monthly commencing with the second full calendar month following issuance. The Company issued a total of $9,950,000 in principal amount of the 2004 Notes. In connection with the sale of the
2004 Notes, the Company also issued Series A Warrants to participating NASD Broker-Dealers for the purchase of up to 600,000 shares of the Company's Common Stock. A total of 594,060
Series A Warrants were granted in connection with the sale of the 2004 Notes. Under the Plan the 2004 Notes were converted to Common Stock of the reorganized Company and the Series A
Warrants were cancelled.

(4) Net Loss Per Common Share

Net loss per common share is calculated as required by FASB Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("Statement
No. 128"). Statement No. 128 requires dual presentation of basic and diluted earnings per share and a reconciliation between the two amounts. Basic earnings per share excludes dilution,
and diluted earnings per share reflects the potential dilution that would occur if securities to issue Common Stock were exercised and converted into Common

11

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Stock. In loss periods, dilutive common equivalent shares are excluded as the effect would be antidilutive.

Net
loss per common share for periods prior to August 31, 2002 is not meaningful due to the cancellation of all equity interests pursuant to the Plan, which was consummated upon
the completion of the Merger on August 30, 2002.

The
Company issued 2,079,948 shares of Common Stock upon consummation of the Plan and issued 500,042 shares of Series B Preferred Stock which is convertible at the option of the
holders into 1,720,130 shares of the Company's Common Stock. In loss periods, dilutive common equivalent shares are excluded as the effect would be antidilutive.

(5) Other Comprehensive Income

Other comprehensive income is as follows:

|                                                   |  | For the One Month Period
Ended September 30, 2002
|-------------------------------------------------- |  | -------------------------------------------------
|
|Unrealized gain from available for sale securities |  | $                                                
|                                                   |  |                                                  

12

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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-K for the fiscal year ended February 2, 2002.

GENERAL

PawnMart, Inc.
(the "Company") is a specialty finance and retail enterprise principally engaged in establishing and operating stores which advance money secured by the pledge of
tangible personal property and sell pre-owned merchandise to the value-conscious consumer. The Company generates income through collection of a monthly service charge from advancing money
to individuals based primarily upon the estimated resale value of pledged personal property such as jewelry, consumer electronics, tools, musical instruments, firearms, automobiles and other
miscellaneous items and through profit realized on the retail sale of the unredeemed or other purchased pre-owned merchandise.

The
Company's total revenues are derived primarily from service charges on loans and the proceeds from the sales of merchandise inventory. The Company's pawn loans are generally made on
the pledge of tangible personal property for one month, with an automatic sixty-day extension period. All pawn loans are collateralized by tangible personal property placed in the
possession of the Company, except for automobile title loans. During the term of an automobile title loan, the borrower is allowed to maintain possession of the collateral. Pawn service charges are
recognized when loans are repaid or renewed. If a loan is not repaid, the principal amount advanced on the loan, exclusive of any uncollected pawn service charges, becomes the carrying value of the
forfeited collateral (inventory), which is recovered through subsequent sales.

The
Company filed for protection under the Bankruptcy Code on July 9, 2001. The Company operated as debtor in possession throughout the bankruptcy proceedings. The Plan was filed
on February 15, 2002 and was amended on April 3, 2002. A confirmation hearing for the Plan was held on May 20, 2002 and the Plan was confirmed by the Bankruptcy Court as of that
date with an effective date of May 31, 2002.

Pursuant
to the Plan, the Company issued 2,079,948 shares of Common Stock to its unsecured creditors in exchange for indebtedness. The Company also completed a merger with C/M
Holdings, Inc., a Texas corporation ("CMHI"), whereby the equity holders of CMHI received two new classes of Preferred Stock, 1,071,636 shares of Series A Preferred Stock and 500,042
shares of Series B

13

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Preferred Stock. The 500,042 shares of Series B Preferred Stock are convertible into 1,720,130 shares of Common Stock, or approximately 45% of the total Common Stock. The Company also
negotiated a Post-Confirmation Credit Facility with Comerica in the amount of $4,500,000. Terms of the Plan are set forth in the Company's Form 10-K for the year ended
February 2, 2002.

Selected
elements of the Company's unaudited statements of operations are shown below for the three months ended September 30, 2002 and October 6, 2001 as a percentage of
total revenues. The following table, as well as the discussion following, 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-K for the fiscal year ended February 2, 2002.

|                                                                                                      |  | Three Months Ended October 6, 2001 |    | Two Months Ended Auguat 31, 2002 |   | One Month Ended September 30, 2002 |   | Three Months Ended September 30, 2002 |   
|----------------------------------------------------------------------------------------------------- |  | ---------------------------------- | -- | -------------------------------- | - | ---------------------------------- | - | ------------------------------------- | --
|Merchandise sales                                                                                     |  | 71.3                               | %  | 63.9                             | % | 66.9                               | % | 65.0                                  | % 
|Pawn service charges                                                                                  |  | 26.8                               |    | 34.6                             |   | 30.1                               |   | 32.9                                  |   
|Other income                                                                                          |  | 1.9                                |    | 1.5                              |   | 3.0                                |   | 2.1                                   |   
|                                                                                                      |  |                                    |    |                                  |   |                                    |   |                                       |   
|Total revenues                                                                                        |  | 100.0                              |    | 100.0                            |   | 100.0                              |   | 100.0                                 |   
|Cost of sales                                                                                         |  | 57,6                               |    | 43.5                             |   | 48.3                               |   | 45.3                                  |   
|                                                                                                      |  |                                    |    |                                  |   |                                    |   |                                       |   
|Gross profit                                                                                          |  | 42.3                               |    | 56.5                             |   | 51.7                               |   | 54.7                                  |   
|Store operating expenses                                                                              |  | 31.7                               |    | 36.3                             |   | 32.3                               |   | 34.8                                  |   
|                                                                                                      |  |                                    |    |                                  |   |                                    |   |                                       |   
|Store contribution margin                                                                             |  | 10.6                               |    | 20.2                             |   | 19.4                               |   | 19.9                                  |   
|Corporate administrative expenses (including reorganization items excluding gain on debt discharge(1) |  | 12.6                               |    | 23.3                             |   | 16.0                               |   | 20.7                                  |   
|Interest expense                                                                                      |  | 3.4                                |    | 3.4                              |   | 2.7                                |   | 3.1                                   |   
|Depreciation and amortization                                                                         |  | 2.3                                |    | 2.6                              |   | 1.7                                |   | 2.2                                   |   
|                                                                                                      |  |                                    |    |                                  |   |                                    |   |                                       |   
|Net loss                                                                                              |  | (7.7                               | )% | (9.1                             | ) | (1.0                               | ) | (6.1                                  | )%
|                                                                                                      |  |                                    |    |                                  |   |                                    |   |                                       |   

---

RESULTS OF OPERATIONS

Three Months Ended September 30, 2002 Compared to Three Months Ended October 6, 2001

Total revenues decreased 26.6% to $3,860,000 during the three months ended September 30, 2002 (the "Three Month 2002 Period") as compared to $5,263,000
during the three months ended October 6, 2001 (the "Three Month 2001 Period"). The overall decrease was attributable primarily to the closing or sale of 16 stores ("Closed Stores") since the
beginning of the prior fiscal year which accounted for $1,892,000 of the decrease. Stores that remained open for the full 12 months or more as of September 30, 2002 (the "Comparable
Stores") experienced a net increase in revenues of $490,000 or 16.0%.

Merchandise
sales decreased 33.2% to $2,508,000 during the Three Month 2002 Period from $3,754,000 during the Three Month 2001 Period primarily due to the loss of sales attributable to
the Closed Stores of $1,559,000. Sales in Comparable Stores for the Three Month 2002 Period increased $313,000 or 15.0%.

14

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Pawn
service charges decreased $136,000 or 9.7% to $1,212,000 during the Three Month 2002 Period from $1,408,000 during the Three Month 2001 Period primarily due to operating fewer
stores for the Three Month 2002 Period. Pawn service charges from Comparable Stores increased $186,000 or 20.4% from $913,000 for the Three Month 2001 Period as compared to the Three Month 2002
Period.

Gross
profit decreased 5.2% to $2,113,000 during the Three Month 2002 Period from $2,235,000 during the Three Month 2001 Period primarily due to a reduction in gross profit from Closed
Stores of $407,000 in the Three Month 2001 Period. Gross profit for Comparable Stores increased $291,000 for the Three Month 2002 Period as compared to the Three Month 2001 Period, a 18.8% increase.
Gross profit as a percentage of total revenues increased to 54.7% during the Three Month 2002 Period as compared to 42.3% during the Three Month 2001 Period primarily as a result lower margins on
merchandise sales for Closed Stores in the Three Month 2001 Period.

Store
operating expenses decreased to $1,345,000 for the Three Month 2002 Period from $1,671,000 during the Three Month 2001 Period primarily due to reduction in expenses attributable to
Closed Stores. On a Comparable Store basis, store operating expenses were 35.3% of total revenues during the Three Month 2002 Period compared to 38.7% of total revenues during the Three Month 2001
Period primarily due to lower personnel and occupancy costs as a percentage of total revenue.

Store
contribution margin (defined as total store revenues less direct operating expenses, which exclude corporate administrative expenses, interest expense, and depreciation and
amortization expense) increased to $768,000 from $564,000 during the Three Month 2002 Period compared to Three Month 2001 Period primarily due to the lower gross profit on merchandise liquidation
sales for Closed Stores in the Three Month 2001 Period.

Corporate
administrative expenses increased 19.2% to $799,000 during the Three Month 2002 Period from $670,000 during the Three Month 2001 Period primarily due to costs related to the
financial restructuring. Corporate administrative expenses increased to 20.6% of total revenues during the Three Month 2002 Period as compared to 12.7% during the Three Month 2001 Period primarily due
to reduced revenues from store closings and due the costs attributed to the Company's bankruptcy reorganization.

Interest
expense decreased $58,000 from $179,000 during the Three Month 2002 Period as compared to the Three Month 2001 Period primarily due to decreased borrowings under the Credit
Facility.

LIQUIDITY AND CAPITAL RESOURCES

At
September 30, 2002, the Company's primary sources of liquidity were $2,026,000 in cash and cash equivalents, $399,000 in pawn service charges receivable, $3,628,000 in pawn
loans outstanding, and $2,508,000 in inventories. Additionally, the Company has $5,038,000 in marketable securities held as a long term investment due to management's intent to hold the securities for
tax purposes. The Company also had $52,000 available to borrow under the Post-Confirmation Credit Facility.

Under
the terms of the Plan approved by the Bankruptcy Court, the Company received an investment of approximately $7.8 million, of which $2.6 million was in cash, through
the Merger, in exchange for two classes of Preferred Stock. The Company issued 1,071,636 shares of non-voting Series A Preferred Stock and 500,042 shares of Series B
Preferred Stock. Both classes of preferred stock have a par value of $0.01 per share and pay a 5% annual cumulative cash dividend. The dividend is payable quarterly. The Series A Preferred
Stock must be redeemed by the Company for cash at $5.00 per share beginning three years after the Closing Date (August 30, 2002) in amounts of at least 100,000 shares, or $500,000, per year.
Each April 30 thereafter through 2009, an additional 100,000 shares must

15

---

be redeemed at par value for cash. On April 30, 2010, any unredeemed shares plus any accrued and unpaid dividends must be redeemed at par value for cash. The value of Series A Preferred
Stock to be issued is estimated to be approximately $5 million based on the current value of CMHI net assets. The Series B Preferred Stock is not subject to mandatory redemption. After
April 30, 2009 the Series B Preferred Stock may be redeemed by the Company in cash at any time in whole or (with some exceptions), from time to time in part, at the option of the
Company, at $5.00 per share plus accumulated, unpaid dividends on the date of redemption. The Series B Preferred Stock is convertible into approximately 45% of the Company's Common Stock on the
date of issuance, subject to anti-dilutive adjustment, and has voting rights on the same basis as the Common Stock.

The
Company is dependent on the investment of cash and marketable securities provided in the Merger to fund projected operating losses during the fiscal year ended June 30, 2003
and to provide sufficient working capital to increase pawn loans and inventories to levels necessary for the Company to be profitable.

The
Company's profitability and liquidity is affected by the amount of loans outstanding, which is controlled in part by the Company's lending decisions. The Company is able to influence
the frequency of forfeiture of collateral by increasing or decreasing the amount loaned in relation to the sales value of the pledged property. Tighter credit decisions generally result in smaller
loans in relation to the estimated sales value of the pledged property and can thereby decrease the Company's aggregate loan balance and, consequently, decrease pawn service charges. Additionally,
lower loans in relation to the pledged property's estimated sales value tend to slightly increase loan redemptions and improve the
Company's liquidity. Conversely, providing higher loans in relation to the estimated sales value of the pledged property can result in an increase in the Company's pawn service charge income. Higher
average loan balances can also result in a slight increase in loan forfeitures, which increases the quantity of goods on hand and, unless the Company increases inventory turnover, reduces the
Company's liquidity.

With
the Company's successful emergence from bankruptcy, management believes the reorganized Company has sufficient liquidity and capital resources to meet its financial obligations,
make planned capital expenditures and debt payments as a result of the Merger. Future operating performance and expected cash flows will be subject to financial, economic and other factors affecting
the business and operations beyond its control and will affect the Company's ability to expand its business anticipated in its financial plan.

ITEM 3. CONTROLS AND PROCEDURES

Based on their most recent evaluation, which was completed within 90 days of the filing of this Form 10-QSB, the President and Chief
Financial Officer have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in reports that the Company files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. There were no
significant changes in the Company's internal controls or other factors that could significantly affect these disclosure controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

16

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company filed its Plan and Disclosure Statement on February 15, 2002 and filed its First Amended Plan and First Amended Disclosure Statement on
April 3, 2002. The Disclosure Statement was approved by the Bankruptcy Court on April 3, 2002. The Plan was confirmed by the Bankruptcy Court on May 20, 2002 with an Effective
Date of May 31, 2002. The Plan was consummated on August 30, 2002 with the consummation of the Merger. All legal proceedings prior to the Petition Date have been settled in the
bankruptcy proceeding.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

The Company issued the following securities pursuant to the consummation of its Plan; 2,079,948 shares of Common Stock in exchange for approximately
$10.8 million of prepetition liabilities, 1,071,636 shares of Series A Preferred Stock and 500,042 shares of Series B Preferred Stock in exchange for $7.8 million of assets
pursuant to the Merger. All equity interests that existed prior to the Effective Date were cancelled upon consummation of the Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company was in default on payment of interest on its 2004 Notes and on the payment of dividends on its 8% Preferred Stock at the time of its bankruptcy
filing. No payments were made during the bankruptcy proceeding. The 2004 Notes were exchanged for equity in the reorganized Company under the terms of the Plan as described herein and the interest of
the holders of the 8% Preferred Stock was cancelled.

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

|Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1   |  | Revolving Credit Agreement Between Pawnmart, Inc. and Comerica Bank dated August 30, 2002; (certain exhibits and schedules to this agreement have been omitted; the Registrant agrees to furnish supplementally to the
Commission, upon request; a copy of these exhibits and schedules); Revolving Note in the original principal amount of $4,500,000 payable by PawnMart, Inc. to Comerica Bank dated August 30, 2002; Security Agreement regarding negotiable collateral
granted by PawnMart, Inc. to Comerica Bank dated August 30, 2002; and Security Agreement regarding negotiable collateral granted by C/M Holdings, Inc. to Comerica Bank dated August 30, 2002.

---

17

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(b)  Reports on Form 8-K

On July 24, 2002 the Company filed a Form 8-K reporting the Company's change of its fiscal year end from the Saturday nearest
January 31 to December 31.

On
July 26, 2002 the Company filed a Form 8-K/A reporting the Company's change of its fiscal year end from the Saturday nearest January 31 to
June 30 (rather than to December 31 as erroneously reported in the Form 8-K filed on July 24, 2002).

On
August 12, 2002 the Company filed a Form 8-K/A reporting the filing of the Company's Fifth Modification (the "Fifth Modification") to its First Amended Plan
of Reorganization (the "Plan") in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division in the case ofPawnMart, Inc.,
Debtor, Case No. 01-44957-BJH-11. The Fifth Modification provides for a delay in the Closing Date (as defined in the Plan) from
July 31 to August 30, 2002.

On
August 20, 2002 the Company filed a Form 8-K reporting the Company's engagement of Grant Thornton LLP as the Company's new principal independent accountant
to audit the Company's consolidated financial statements as of and for the fiscal year ended February 2, 2002.

On
September 16, 2002 the Company filed a Form 8-K reporting the Company's acquisition of C/M Holdings, Inc. through a merger, with the Company as the
surviving corporation, effective August 30, 2002.

SIGNATURES

Pursuant to the requirements 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.

|                  |  | PAWNMART, INC. (REGISTRANT)
|----------------- |  | ---------------------------
|November 19, 2002 |  | By:                        
|November 19, 2002 |  | By:                        

18

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CERTIFICATIONS

I, John R. Boudreau, President and Chief Executive Officer of PawnMart, Inc., certify that:





|Date: November 19, 2002 |  |  |  | /s/JOHN R. BOUDREAUJohn R. Boudreau President and Chief Executive Officer
|----------------------- |  |  |  | -------------------------------------------------------------------------

I,
Robert W. Schleizer, Senior Vice President and Chief Financial Officer of PawnMart, Inc., certify that:

19

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|Date: November 19, 2002 |  | By: |  | /s/ROBERT W. SCHLEIZERRobert W. Schleizer Senior Vice President and Chief Financial
Officer
|----------------------- |  | --- |  | -------------------------------------------------------------------------------------------

20

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EXHIBIT INDEX

|Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1   |  | Revolving Credit Agreement Between Pawnmart, Inc. and Comerica Bank dated August 30, 2002; Revolving Note in the original principal amount of $4,500,000 payable by PawnMart, Inc. to Comerica Bank dated August 30, 2002;
Security Agreement regarding negotiable collateral granted by PawnMart, Inc. to Comerica Bank dated August 30, 2002; and Security Agreement regarding negotiable collateral granted by C/M Holdings, Inc. to Comerica Bank dated August 30,
2002.

21

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