<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549


                                   FORM 10-Q


   [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the quarterly period ended July 31, 1999


   [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the transition period from _________ to _________


                          Commission File No. 1-13919


                                PAWNMART, INC.
            (Exact name of registrant as specified in its charter)


             DELAWARE
    (State or other jurisdiction                         75-2520896
  of incorporation or organization)         (I.R.S. Employer Identification No.)

            6300 RIDGLEA PLACE, SUITE 724, FORT WORTH, TEXAS 76116
                   (Address of principal executive offices)

                                (817) 569-9305
                        (Registrant's telephone number)


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

The number of shares of Common Stock outstanding as of September 13, 1999 was
7,209,445. The number of Series A Redeemable Common Stock Purchase Warrants
outstanding as of September 13, 1999 was 1,734,960. The number of Series B
Redeemable Common Stock Purchase Warrants outstanding as of September 13, 1999
was 1,380,000.

<PAGE>


                         PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                        PAWNMART, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets

                (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                           July 31,          January 30,
                                                                                             1999                1999
                                                                                             ----                ----
                                                                                         (Unaudited)
         <S>                                                                           <C>                <C>
                                          ASSETS
         Current assets:
            Cash and cash equivalents                                                  $         646      $         298
            Accounts receivable                                                                   91                 60
            Pawn service charges receivable                                                      706                446
            Loans                                                                              6,391              4,419
            Inventories, net                                                                   5,254              3,011
            Prepaid expenses and other current assets                                            276                199
                                                                                        ---------------    ---------------
                     Total current assets                                                     13,364              8,433
                                                                                        ---------------    ---------------

         Property and equipment, net                                                           2,469              2,232
         Debt issuance costs, net                                                                757                137
         Other assets, net                                                                       606                390
                                                                                        ---------------    ---------------
                     Total assets                                                      $      17,196      $      11,192
                                                                                        ---------------    ---------------
                                                                                        ---------------    ---------------

                            LIABILITIES AND STOCKHOLDERS' EQUITY

         Current liabilities:
            Accounts payable and accrued liabilities                                   $       1,043      $       1,103
            Current installments of notes payable                                                 63                342
                                                                                        ---------------    ---------------
                     Total current liabilities                                                 1,106              1,445
                                                                                        ---------------    ---------------

         Long-term notes payable, net of current installments (note 2)                        12,462              4,840
                                                                                        ---------------    ---------------
                     Total liabilities                                                        13,568              6,285
                                                                                        ---------------    ---------------

         Stockholders' equity (note 4):
            Preferred stock, $.01 par value; authorized 10,000,000 shares                          -                  -
            Common stock, $.01 par value; authorized 20,000,000 shares;
               7,230,877 shares issued                                                            72                 72
            Series A redeemable common stock purchase warrants, $0.125 par
               value; 1,683,780 and 1,380,000 warrants issued and outstanding
               at July 31, 1999 and January 30, 1999, respectively (note 2)                      210                173
            Series B redeemable common stock purchase warrants, $0.0625 par
               value; 1,380,000 warrants issued and outstanding                                   86                 86
            Additional paid-in capital                                                        22,242             22,242
            Accumulated deficit                                                              (18,912)           (17,596)
                                                                                        ---------------    ---------------
                                                                                               3,698              4,977
            Less treasury stock, at cost; 21,432 common shares                                   (70)               (70)
                                                                                        ---------------    ---------------

                     Total stockholders' equity                                                3,628              4,907
                                                                                        ---------------    ---------------

                     Total liabilities and stockholders' equity                        $      17,196      $      11,192
                                                                                        ---------------    ---------------
                                                                                        ---------------    ---------------

</TABLE>


          See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

                        PAWNMART, INC. AND SUBSIDIARIES
                Unaudited Consolidated Statements of Operations

                     (In thousands, except per share data)


<TABLE>
<CAPTION>

                                                              Three Months Ended                      Six Months Ended
                                                              ------------------                      ----------------
                                                          July 31,           August 1,           July 31,           August 1,
                                                            1999                1998               1999                1998
                                                            ----                ----               ----                ----
         <S>                                           <C>                 <C>                <C>                 <C>

         Revenues:
            Merchandise sales                          $    3,029          $    1,685         $    5,914          $    3,527
            Pawn service charges                            1,684                 776              3,103               1,551
            Other                                              61                  38                104                  71
                                                        ------------        ------------       ------------        ------------
                  Total revenues                            4,774               2,499              9,121               5,149

         Cost of sales                                      2,332               1,125              4,383               2,344
                                                        ------------        ------------       ------------        ------------
                  Gross profit                              2,442               1,374              4,738               2,805
                                                        ------------        ------------       ------------        ------------

         Expenses:
            Store operating expenses                        1,921               1,162              3,672               2,223
            Corporate administrative expenses                 791                 764              1,479               1,523
            Interest expense                                  314                  22                511                 831
            Depreciation and amortization                     190                 136                392                 257
                                                        ------------        ------------       ------------        ------------
                  Total expenses                            3,216               2,084              6,054               4,834
                                                        ------------        ------------       ------------        ------------

                  Net loss                                   (774)               (710)            (1,316)             (2,029)

         Preferred stock dividends                             -                   -                  -                  692
                                                        ------------        ------------       ------------        ------------

                  Net loss to common
                     stockholders                      $     (774)         $     (710)        $   (1,316)         $   (2,721)
                                                        ------------        ------------       ------------        ------------
                                                        ------------        ------------       ------------        ------------

         Loss per common share (note 3):
                  Basic                                $    (0.10)         $    (0.10)        $    (0.18)         $    (0.47)
                                                        ------------        ------------       ------------        ------------
                                                        ------------        ------------       ------------        ------------

                  Diluted                              $    (0.10)         $    (0.10)        $    (0.18)         $    (0.47)
                                                        ------------        ------------       ------------        ------------
                                                        ------------        ------------       ------------        ------------

</TABLE>



         See accompanying notes to consolidated financial statements.

                                       3

<PAGE>


                        PAWNMART, INC. AND SUBSIDIARIES
                Unaudited Consolidated Statements of Cash Flows

                                (In thousands)

<TABLE>
<CAPTION>
                                                                                                         Six Months Ended
                                                                                                         ----------------
                                                                                                    July 31,           August 1,
                                                                                                      1999               1998
                                                                                                      ----               ----
<S>                                                                                             <C>               <C>
Cash flows from operating activities:
   Net loss                                                                                      $       (1,316)    $      (2,029)
   Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization                                                                      392               257
         Amortization of debt issuance costs                                                                 92                96
         Amortization of debt discount                                                                        2               495
         Common stock issued for services                                                                     -               200
         Changes in operating assets and liabilities:
               Accounts receivable                                                                          (31)             (115)
               Pawn service charges receivable                                                             (260)              (11)
               Inventories, net                                                                          (2,243)             (417)
               Prepaid expenses and other current assets                                                    (77)              (21)
               Other assets                                                                                (233)              237
               Accounts payable and accrued liabilities                                                     (60)             (461)
                                                                                                 ---------------    ---------------
                     Net cash used in operating activities                                               (3,734)           (1,769)
                                                                                                 ---------------    ---------------

Cash flows from investing activities:
   Net decrease (increase) in pawn loans                                                                 (1,972)                 1
   Purchases of property and equipment                                                                     (612)              (600)
                                                                                                 ---------------    ---------------
                     Net cash used in investing activities                                               (2,584)              (599)
                                                                                                 ---------------    ---------------

Cash flows from financing activities:
   Proceeds from issuance of notes payable                                                               10,696                135
   Principal payments on notes payable                                                                   (3,318)            (2,596)
   Net proceeds from issuance of common stock and warrants                                                    -              5,583
   Payment of debt issuance costs                                                                          (712)               (10)
   Preferred stock dividends paid                                                                             -                (18)
                                                                                                 ---------------    ---------------
                     Net cash provided by financing activities                                            6,666              3,094
                                                                                                 ---------------    ---------------

Net increase in cash and cash equivalents                                                                   348                726
Cash and cash equivalents at beginning of period                                                            298                151
                                                                                                 ---------------    ---------------
Cash and cash equivalents at end of period                                                       $          646     $          877
                                                                                                 ---------------    ---------------
                                                                                                 ---------------    ---------------

Supplemental disclosures of cash flow information -
   Cash paid for interest                                                                        $          350     $          381
                                                                                                 ---------------    ---------------
                                                                                                 ---------------    ---------------

</TABLE>

NONCASH FINANCING ACTIVITIES:

    On March 20, 1998, $9,520,000 in convertible subordinated debentures, net
of unamortized debt issuance costs of $443,000, were automatically converted
into 2,380,000 outstanding shares of common stock and 3,661,200 shares of
preferred stock were automatically converted into 1,482,766 outstanding
shares of common stock in connection with the completion of the Company's
initial public offering. During the six months ended August 1, 1998, the
Company recognized $674,000 in preferred stock dividends in connection with
the amortization of preferred stock discounts resulting from the preferred
stock beneficial conversion feature. On May 1, 1998, the Company issued
44,445 shares of unregistered common stock to a corporation in exchange for
$200,000 in professional services associated with marketing and new store
site selection analysis.

    During the six months ended July 31, 1999, the Company issued 303,780
Series A Warrants in connection with the issuance of the 2004 Notes (see note
2). The Company has recorded a debt discount of $37,000 representing the
value of the underlying Series A Warrants and is amortizing such amount into
interest expense over the life of the 2004 Notes.

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                        PAWNMART, INC. AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements

                       July 31, 1999 and August 1, 1998

                                  (Unaudited)


(1)    BASIS OF PRESENTATION

           The accompanying consolidated financial statements were prepared in
       accordance with 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 and cash
       flows as of and for the periods presented. All such adjustments are of a
       normal recurring nature. The results of operations for the three and six
       months ended July 31, 1999 are not necessarily indicative of the results
       that may be expected for the entire fiscal year or any other interim
       period.

           The consolidated financial statements include the financial
       statements of PawnMart, Inc. (the "Company") and its single purpose,
       wholly owned subsidiaries PCI Finance 1994-I, Inc., PCI Finance 1995-I,
       Inc., PCI Finance 1996-1, Inc., and PCI Finance 1996-2, Inc. All
       significant intercompany balances and transactions have been eliminated
       in consolidation. The consolidated financial statements should be read in
       conjunction with the consolidated financial statements for the fiscal
       year ended January 30, 1999 included in the Company's Form 10-K which has
       been previously filed with the Securities and Exchange Commission.

(2)    NOTES PAYABLE

       REVOLVING CREDIT FACILITY-

           The Company maintains a $10,000,000 revolving credit facility with
       Comerica Bank (the "Credit Facility"). At July 31, 1999, $7,435,000 was
       outstanding under the Credit Facility and an additional $400,000 was
       available to the Company pursuant to the available borrowing base. The
       Credit Facility bears interest at either (i) the prevailing prime rate
       plus 0.75%, which was 8.75% at July 31, 1999, or (ii) the prevailing
       LIBOR rate plus 3.35%, and matures on October 13, 2001. Amounts available
       under the Credit Facility are limited to certain percentages of pawn
       loans, inventories, and pawn service charges receivable. The Credit
       Facility is collateralized by substantially all of the unencumbered
       assets of the Company. Under the terms of the 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 and covenants as of July 31, 1999. The Company is required
       to pay an annual commitment fee of 1/2 of 1% on the average daily unused
       portion of the Credit Facility commitment. The Company is prohibited from
       paying cash dividends or acquiring treasury stock under the terms of the
       Credit Facility.

       SUBORDINATED DEBT -

           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 are being offered on a "best
       efforts" basis by participating National Association of Securities
       Dealers, Inc. broker-dealers ("NASD Broker-Dealers"). Interest on the
       2004 Notes is payable monthly commencing with the second full calendar
       month following issuance. At the option of the Company, the 2004 Notes
       may be redeemed prior to December 31, 2004 at stipulated redemption
       prices. The Company had issued a total of $5,062,000 and $5,916,000 of
       the 2004 Notes as of July 31, 1999 and September 13, 1999, respectively.

           In connection with the sale of the 2004 Notes, the Company has agreed
       to issue Series A Warrants to participating NASD Broker-Dealers for the
       purchase of up to 600,000 shares of the Company's common stock. As of
       July 31, 1999, 303,780 Series A Warrants had been granted in connection
       with the sale of the 2004 Notes. The Company has recorded a debt discount
       of $37,000 representing the value of the Series A Warrants and is
       amortizing such amount into interest expense over the life of the 2004
       Notes.

                                       5
<PAGE>

                        PAWNMART, INC. AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements


(3)    NET LOSS PER COMMON SHARE

           Net loss per common share is calculated as required by Financial
       Accounting Standards Board's Statement of Financial Accounting Standards
       No. 128, "Earnings Per Share" (Statement No. 128). Statement No. 128
       requires a 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 stock. In loss periods, dilutive
       common equivalent shares are excluded as the effect would be
       antidilutive.

           The following table presents a reconciliation between basic and
       diluted weighted average common shares outstanding for the three and six
       months ended July 31, 1999 and August 1, 1998, respectively. Since the
       effect of using the weighted average number of shares on a diluted basis
       was antidilutive to the diluted loss per share calculation for the three
       and six months ended July 31, 1999 and August 1, 1998, diluted loss per
       share was calculated using the same weighted average number of common
       shares in the basic loss per share calculation.

<TABLE>
<CAPTION>

                                                             Three Months Ended                Six Months Ended
                                                      -------------------------------  -------------------------------
       (In Thousands)                                   July 31,         August 1,       July 31,         August 1,
                                                          1999             1998            1999             1998
                                                          ----             ----            ----             ----
       <S>                                              <C>              <C>             <C>              <C>

       Weighted average shares - basic                    7,209            7,209           7,209            5,803
       Shares attributable to stock options, warrants
          and convertible securities                        -                -               -              1,040
                                                      --------------   --------------  --------------   --------------
       Weighted average shares - diluted                  7,209            7,209           7,209            6,843
                                                      --------------   --------------  --------------   --------------
                                                      --------------   --------------  --------------   --------------

</TABLE>

(4)    SUBSEQUENT EVENT

           On September 1, 1999, the Company sold 416,667 shares of 8%
       Convertible Preferred Stock, $6.00 par value per share (the "Preferred
       Stock") for $2,500,000. The Preferred Stock bears dividends at 8% per
       annum and is payable quarterly in cash. The Preferred Stock is not
       convertible into the Company's common stock until March 1, 2001. From
       March 1, 2001 until August 31, 2002, the Preferred Stock is convertible
       at the option of the purchaser at the lesser of (i) 80% of the average
       closing sales price of the Company's common stock for the preceding 25
       trading days as quoted on the NASDAQ market or (ii) $6.00 per share.
       After August 31, 2002, the Preferred Stock is convertible at the option
       of the purchaser at 66 2/3% of the average closing sales price of the
       Company's common stock for the preceding 25 trading days as quoted on the
       NASDAQ market. The Company may redeem the Preferred Stock, in whole or in
       part, prior to August 31, 2002 at 120% of the par value of Preferred
       Stock then outstanding. After August 31, 2002, the Company may redeem the
       Preferred Stock, in whole or in part, at 100% of the par value of the
       Preferred Stock then outstanding. Each share of the Preferred Stock shall
       be entitled to one vote per share, voting together with the holders of
       the Company's common stock, on all matters submitted to a vote of
       stockholders. In connection with the sale of the Preferred Stock, the
       Company issued 312,500 warrants exercisable to purchase shares of the
       Company's common stock through August 31, 2004 at $5.00 per share and
       90,000 warrants exercisable to purchase shares of the Company's common
       stock through August 31, 2004 at $3.60 per share.

                                       6
<PAGE>

                        PAWNMART, INC. AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements


(4)    SUBSEQUENT EVENT, CONTINUED

           The following table presents selected consolidated balance sheet data
       on (i) an actual basis as of July 31, 1999 and (ii) a pro forma basis as
       of July 31, 1999 to reflect the sale of the Preferred Stock and the
       application of the net proceeds therefrom of approximately $2,280,000
       against the Company's Credit Facility.

<TABLE>
<CAPTION>

                                                            Actual at                          Pro Forma at
       (In thousands)                                     July 31, 1999                       July 31, 1999
                                                          -------------                       -------------
       <S>                                                <C>                                 <C>

       Loans                                              $    6,391                          $    6,391
       Inventories, net                                        5,254                               5,254
       Working capital                                        12,258                              12,258
       Total assets                                           17,196                              17,196
       Long-term notes payable, net of
          current installments                                12,462                              10,182
       Total stockholders' equity                              3,628                               5,908

</TABLE>

















                                       7
<PAGE>


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     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 AND 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 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
THERETO AND OTHER FINANCIAL DATA INCLUDED IN THE COMPANY'S FORM 10-K FOR THE
FISCAL YEAR ENDED JANUARY 30, 1999.

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 in two
ways: 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.
As of September 1, 1999, the Company was one of five publicly traded pawnshop
operators in the United States, and it owned and operated 39 stores located in
Alabama, Georgia, North Carolina, South Carolina, and Texas.

     Prior to March 1998, the Company owned and operated 19 stores. The
completion of the Company's initial public offering of common stock in March
1998 resulted in net proceeds of $5,583,000 and enhanced the Company's ability
to implement its business strategy. In connection with the completion of the
initial public offering, the Company automatically converted $9,520,000 of its
debt into 2,380,000 outstanding shares of common stock and 3,661,200 shares of
preferred stock into 1,482,766 outstanding shares of common stock. Additionally,
the Company utilized $2,524,000 of the net proceeds to repay certain notes
payable.

     In order to fund store expansion during the fiscal year ended January 30,
1999 ("Fiscal 1998"), the Company utilized the remaining proceeds from the
initial public offering and secured a $10 million revolving line of credit with
Comerica Bank. With the above, the Company was able to achieve a 68 percent
increase in the number of its stores by adding 13 stores during the last nine
months of Fiscal 1998. During the six months ended July 31, 1999, the Company
has added seven stores by utilizing additional borrowings under its line of
credit facility and with borrowings under the public offering of the 2004 Notes.
The Company plans to add six to 11 additional stores during the remainder of the
fiscal year ending January 29, 2000 ("Fiscal 1999") with additional borrowings
under its line of credit facility, borrowings under the public offering of the
2004 Notes, and the net proceeds from the sale of the Preferred Stock. Such
expansion would bring the Company to a total of 45 to 50 stores.

     As discussed in the following section, the Company's results of operations
and cash flows are significantly impacted by (i) expansion through development
of new stores or acquisitions of existing stores in locations that meet site
selection, store size and configuration requirements in selected markets and
(ii) the maturation cycle of stores.

                                       8
<PAGE>

INITIAL CAPITAL EXPENDITURES AND COSTS ASSOCIATED WITH EXPANSION

     The Company's strategy is to develop or acquire stores in selected regional
and local markets meeting required store size, configuration, and site selection
requirements. The Company believes that such anticipated expansion will continue
to provide economies of scale in supervision, purchasing supplies and inventory,
administration and marketing by decreasing the overall average cost of such
functions per unit owned. After a suitable market has been selected, management
determines whether expansion through development of new stores or through
acquisitions would result in the most favorable impact on profitability and
capital requirements.

     After a suitable location has been found and a lease and license are
obtained, a new store can be ready for business within six to eight weeks, with
completion of counters, vaults and security system and transfer of merchandise
from existing stores, and external purchases of pre-owned merchandise. The
Company projects the initial capital expenditures and costs associated with
opening a new PAWNMART-SM- store to total approximately $250,000 with additional
expenditures during the 12 months after opening of approximately $150,000 to
fund loan growth and planned start-up losses. Because of these start-up losses
and expenditures necessary to support anticipated growth, the Company expects to
incur losses during a high-growth phase. There can be no assurance that future
initial capital expenditures and costs and start-up losses with new store
operations will not vary from historical amounts.

     The Company will generally acquire stores in locations meeting its site
selection criteria if (i) the total capital expenditures required to acquire the
existing store are less than or equal to the total costs to develop a new store,
(ii) the acquisition does not result in significant goodwill balances, and (iii)
demographic data and due diligence procedures indicate an acceptable growth
potential. Because acquired stores mature more quickly than new stores and
generally result in lower initial capital expenditures, the Company's
profitability and capital requirements are impacted by the number of stores
added through acquisition versus the number of new stores added.

MATURATION OF NEWLY ESTABLISHED STORES AND ACQUIRED STORES

     The revenues and profitability of a new store are primarily impacted by the
Company's ability to increase pawn loans during the first 12 months of
operations. A new store is generally unprofitable during its first eight to ten
months of operations due to the initial loan growth during that period resulting
in lower pawn service charges. The Company's new stores experience substantially
higher levels of revenues and profitability after reaching two years of age. At
September 1, 1999, 20 of the Company's 39 stores were under two years of age.
These stores are expected to have a favorable impact on profitability if they
achieve the substantially increased lending and retail volumes experienced in
the Company's older stores.

     An acquired store will generally mature faster than a new store due to an
established base of customers and the Company's ability to accelerate the
maturation of the store's pawn loan balances. The Company's profitability during
rapid expansion will be significantly impacted by its ability to acquire
existing stores meeting the Company's acquisition criteria. There can be no
assurance that future store revenues and store profitability will not vary from
historical amounts.

                                       9
<PAGE>

     Selected elements of the Company's unaudited consolidated statement of
operations are shown below for the three and six months ended July 31, 1999 and
August 1, 1998 as a percentage of total revenues. The following table, as well
as the discussion following, should be read in conjunction with the Company's
consolidated financial statements and notes thereto and other financial data
included in the Company's Form 10-K for the fiscal year ended January 30, 1999.

<TABLE>
<CAPTION>

                                                          Three Months Ended                Six Months Ended
                                                          ------------------                ----------------
                                                        July 31,       August 1,       July 31,         August 1,
                                                          1999           1998            1999             1998
                                                          ----           ----            ----             ----
<S>                                                     <C>            <C>             <C>              <C>
Merchandise sales.....................................    63.4 %         67.4 %          64.8 %           68.5 %
Pawn service charges.................................     35.3           31.1            34.0             30.1
Other income..........................................     1.3            1.5             1.2              1.4
                                                         -----          -----           -----            -----
     Total revenues...................................   100.0          100.0           100.0            100.0
Cost of sales.........................................    48.9           45.0            48.0             45.5
                                                         -----          -----           -----            -----
     Gross profit.....................................    51.1           55.0            52.0             54.5
Store operating expenses..............................    40.2           46.5            40.3             43.2
                                                         -----          -----           -----            -----
     Store contribution margin........................    10.9            8.5            11.7             11.3
Corporate administrative expenses.....................    16.6           30.6            16.2             29.6
Interest expense......................................     6.5            0.9             5.6             16.1
Depreciation and amortization.........................     4.0            5.4             4.3              5.0
                                                         -----          -----           -----            -----
     Net loss.........................................   (16.2)%        (28.4)%         (14.4)%          (39.4)%
                                                         -----          -----           -----            -----
                                                         -----          -----           -----            -----

</TABLE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED JULY 31, 1999 COMPARED TO THREE MONTHS ENDED AUGUST 1, 1998

     Total revenues increased 91.0% to $4,774,000 during the three months ended
July 31, 1999 (the "Three Month 1999 Period") as compared to $2,499,000 during
the three months ended August 1, 1998 (the "Three Month 1998 Period"). The
overall increase was attributable to a 36.4% increase in comparable store
revenues at 21 stores open for 12 full months or more as of July 31, 1999
("Comparable Stores") and revenues from 18 stores added during the 12 months
ended July 31, 1999 ("New Stores").

     Merchandise sales increased 79.8% to $3,029,000 during the Three Month 1999
Period from $1,685,000 during the Three Month 1998 Period due to a 27.7%
increase in merchandise sales from Comparable Stores and merchandise sales from
New Stores. Average inventory per store for Comparable Stores increased 35.7% to
$152,000 at July 31, 1999 from $112,000 at August 1, 1998 primarily due to
continued improvement in the Company's lending operations which have increased
the levels of merchandise available for sale.

     Pawn service charges increased 117.0% to $1,684,000 during the Three
Month 1999 Period from $776,000 during the Three Month 1998 Period primarily
due to a 51.7% increase in pawn service charges from Comparable Stores and
pawn service charges from New Stores. The increased pawn services charges
from Comparable Stores resulted primarily from pawn loans increasing 92.1% to
$4,649,000 at July 31, 1999 from $2,420,000 at August 1, 1998.

     Gross profit increased 77.7% to $2,442,000 during the Three Month 1999
Period from $1,374,000 during the Three Month 1998 Period primarily due to
$774,000 in gross profit generated from New Stores and a 24.4% increase in gross
profit from Comparable Stores. The increase in gross profit at Comparable Stores
is primarily attributable to increased pawn service charges which were offset
slightly by decreased gross profit dollars from merchandise sales. The Company's
consolidated annualized inventory turnover rate remained constant at 2.0 times
during the Three Month 1999 Period and the Three Month 1998 Period. On a
Comparable Store basis, the Company's annualized inventory turnover rate
increased to 2.4 times during the Three Month 1999 Period from 2.2 times during
the Three Month 1998 Period.

                                       10
<PAGE>

     Store operating expenses increased 65.3% to $1,921,000 during the Three
Month 1999 Period from $1,162,000 during the Three Month 1998 Period primarily
due to expenses attributable to New Stores. On a Comparable Store basis, store
operating expenses comprised 35.4% of total revenues during the Three Month 1999
Period compared to 45.5% of total revenues during the Three Month 1998 Period.
The overall decrease in Comparable Store operating expenses as a percent of
total revenues resulted from the Company's ability to leverage store operating
expenses due to the 36.4% increase in Comparable Store revenues.

     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 145.8% to
$521,000, or 10.9% of total revenues, during the Three Month 1999 Period
compared to $212,000, or 8.5% of total revenues, during the Three Month 1998
Period primarily due to significant improvements in the profitability of the
Company's Comparable Stores. Comparable Store contribution margin increased
113.1% to $488,000, or 14.6% of total revenues, during the Three Month 1999
Period compared to $229,000, or 9.4% of total revenues, during the Three Month
1998 Period. The following table presents an analysis of Comparable Store
performance for the Three Month 1999 Period compared to the Three Month 1998
Period.

<TABLE>
<CAPTION>

                                                                    Three Months        Three Months
                                                                        Ended              Ended
                                                                    July 31, 1999      August 1, 1998
                                                                   ----------------   -----------------
      <S>                                                         <C>                <C>

      Merchandise sales.......................................... $       2,125      $      1,664
      Pawn service charges.......................................         1,176               775
      Other......................................................            32                 5
                                                                   ----------------   -----------------
         Total revenues..........................................         3,333             2,444

      Cost of sales..............................................         1,665             1,103
                                                                   ----------------   -----------------
         Gross profit............................................         1,668             1,341

      Store operating expenses...................................         1,180             1,112
                                                                   ----------------   -----------------
         Store contribution margin..............................  $         488      $        229
                                                                   ----------------   -----------------
                                                                   ----------------   -----------------

</TABLE>

     Corporate administrative expenses increased 3.5% to $791,000 during the
Three Month 1999 Period from $764,000 during the Three Month 1998 Period
primarily due to costs incurred during the Three Month 1999 Period to relocate
the corporate offices. The Company's rapid growth has reduced corporate
administrative expenses from 30.6% of total revenues during the Three Month 1998
Period to 16.6% of total revenues during the Three Month 1999 Period. Since the
Company added 18 stores during the 12 months ended July 31, 1999 and plans to
add additional stores during the fiscal year ending January 29, 2000, management
anticipates corporate administrative expenses to continue to decrease as a
percentage of total revenues.

     Interest expense increased to $314,000 during the Three Month 1999 Period
from $22,000 during the Three Month 1998 Period primarily due to interest
expense related to the Company's Credit Facility, the Company's 2004 Notes, and
other short-term borrowings. Interest expense during the Three Month 1998 Period
was related to other short-term borrowings.

     Net loss to common stockholders during the Three Month 1999 Period was
$774,000, or $0.10 per basic and diluted share, compared to $710,000, or $0.10
per basic and diluted share, during the Three Month 1998 Period.

SIX MONTHS ENDED JULY 31, 1999 COMPARED TO SIX MONTHS ENDED AUGUST 1, 1998

     Total revenues increased 77.1% to $9,121,000 during the six months ended
July 31, 1999 (the "Six Month 1999 Period") as compared to $5,149,000 during the
six months ended August 1, 1998 (the "Six Month 1998 Period"). The overall
increase was attributable to a 31.1% increase in revenues from Comparable Stores
and revenues from New Stores.

                                       11
<PAGE>

     Merchandise sales increased 67.7% to $5,914,000 during the Six Month 1999
Period from $3,527,000 during the Six Month 1998 Period due to a 21.9% increase
in merchandise sales from Comparable Stores and merchandise sales from New
Stores. Average inventory per store for Comparable Stores increased 35.7% to
$152,000 at July 31, 1999 from $112,000 at August 1, 1998 primarily due to
continued improvement in the Company's lending operations which have increased
the levels of merchandise available for sale.

     Pawn service charges increased 100.1% to $3,103,000 during the Six Month
1999 Period from $1,551,000 during the Six Month 1998 Period primarily due to
a 50.7% increase in pawn service charges from Comparable Stores and pawn
service charges from New Stores. The increased pawn services charges from
Comparable Stores resulted primarily from pawn loans increasing 92.1% to
$4,649,000 at July 31, 1999 from $2,420,000 at August 1, 1998.

     Gross profit increased 68.9% to $4,738,000 during the Six Month 1999 Period
from $2,805,000 during the Six Month 1998 Period primarily due to $1,264,000 in
gross profit generated from New Stores and a 25.7% increase in gross profit from
Comparable Stores. The increase in gross profit at Comparable Stores is
primarily attributable to increased pawn service charges which were offset
slightly by decreased gross profit dollars from merchandise sales. The Company's
consolidated annualized inventory turnover rate remained constant at 2.2 times
during the Six Month 1999 Period and the Six Month 1998 Period. On a Comparable
Store basis, the Company's annualized inventory turnover rate increased to 2.6
times during the Six Month 1999 Period from 2.4 times during the Six Month 1998
Period.

     Store operating expenses increased 65.2% to $3,672,000 during the Six Month
1999 Period from $2,223,000 during the Six Month 1998 Period primarily due to
expenses attributable to New Stores. On a Comparable Store basis, store
operating expenses comprised 34.3% of total revenues during the Six Month 1999
Period compared to 42.5% of total revenues during the Six Month 1998 Period. The
overall decrease in Comparable Store operating expenses as a percent of total
revenues resulted from the Company's ability to leverage store operating
expenses due to the 31.1% increase in Comparable Store revenues.

     Store contribution margin increased 83.2% to $1,066,000, or 11.7% of total
revenues, during the Six Month 1999 Period compared to $582,000, or 11.3% of
total revenues, during the Six Month 1998 Period primarily due to significant
improvements in the profitability of the Company's Comparable Stores which were
offset by the effects of planned start-up losses at New Stores. Excluding the
effects of planned start-up losses, the Comparable Store contribution margin
increased 97.5% to $1,183,000, or 17.7% of total revenues, during the Six Month
1999 Period compared to $599,000, or 11.8% of total revenues, during the Six
Month 1998 Period. The following table presents an analysis of Comparable Store
performance for the Six Month 1999 Period compared to the Six Month 1998 Period.

<TABLE>
<CAPTION>

                                                                    Six Months          Six Months
                                                                       Ended               Ended
                                                                   July 31, 1999      August 1, 1998
                                                                  ----------------   ----------------
      <S>                                                         <C>                <C>

      Merchandise sales........................................  $      4,276       $      3,507
      Pawn service charges.....................................         2,336              1,550
      Other....................................................            65                 37
                                                                  ----------------   ----------------
         Total revenues........................................         6,677              5,094

      Cost of sales............................................         3,203              2,330
                                                                  ----------------   ----------------
         Gross profit..........................................         3,474              2,764

      Store operating expenses.................................         2,291              2,165
                                                                  ----------------   ----------------
                                                                  ----------------   ----------------
         Store contribution margin.............................  $      1,183       $        599
                                                                  ----------------   ----------------
                                                                  ----------------   ----------------

</TABLE>

                                       12
<PAGE>

     Corporate administrative expenses decreased 2.9% to $1,479,000 during the
Six Month 1999 Period from $1,523,000 during the Six Month 1998 Period primarily
due to the issuance of 44,445 shares of unregistered common stock in exchange
for $200,000 in non-recurring professional fees associated with marketing and
store site selection on May 1, 1998 ("Non-Recurring Professional Fees") which
was offset by increased labor costs associated with (i) the hiring of manager
trainees to support store openings, (ii) the hiring of additional corporate
field and administrative personnel to support planned growth, and (iii) costs
incurred during the Six Month 1999 Period to relocate the corporate offices. The
Company's rapid growth has reduced corporate administrative expenses from 29.6%
of total revenues during the Six Month 1998 Period to 16.2% of total revenues
during the Six Month 1999 Period. Since the Company added 18 stores during the
12 months ended July 31, 1999 and plans to add additional stores during the
fiscal year ending January 29, 2000, management anticipates corporate
administrative expenses to continue to decrease as a percentage of total
revenues.

     Interest expense decreased 38.5% to $511,000 during the Six Month 1999
Period from $831,000 during the Six Month 1998 Period. The Six Month 1998 Period
includes $495,000 in non-cash non-recurring interest expense resulting from the
accounting treatment relating to the beneficial conversion feature associated
with the Company's convertible subordinated debentures ("Non-Cash Non-Recurring
Interest Expense") and $313,000 in interest expense related to debt that was
either converted or repaid upon completion of the Company's initial public
offering ("Non-Recurring Interest Expense"). See note 6 to the consolidated
financial statements included in the Company's Form 10-K for the year ended
January 30, 1999 for a discussion of the accounting treatment relating to the
beneficial conversion feature associated with the Company's convertible
subordinated debentures. Interest expense during the Six Month 1999 Period was
related to the Company's Credit Facility, the Company's 2004 Notes, and other
short-term borrowings.

     During the Six Month 1998 Period, the Company recognized $674,000 in
noncash non-recurring preferred stock dividends resulting from the accounting
treatment relating to the beneficial conversion feature associated with its
convertible preferred stock and $18,000 in non-recurring preferred stock
dividends associated with its 12% Series D Convertible Exchangeable Preferred
stock (collectively, the "Non-Recurring Preferred Dividends"). See note 8 to the
consolidated financial statements included in the Company's Form 10-K for the
year ended January 30, 1999 for a discussion of the accounting treatment
relating to the beneficial conversion feature associated with the Company's
convertible preferred stock. All classes of the Company's preferred stock
converted to common stock upon completion of the Company's initial public
offering in March 1998.

     Net loss to common stockholders during the Six Month 1999 Period was
$1,316,000, or $0.18 per basic and diluted share, compared to $2,721,000, or
$0.47 per basic and diluted share, during the Six Month 1998 Period. Excluding
the Non-Recurring Professional Fees, Non-Cash Non-Recurring Interest Expense,
Non-Recurring Interest Expense, and Non-Recurring Preferred Dividends, net loss
to common stockholders during the Six Month 1998 Period would have been
$1,021,000, or $0.18 per basic and diluted share.

LIQUIDITY AND CAPITAL RESOURCES

     Prior to the completion of its initial public offering in March 1998, the
Company's operations were financed from funds generated from private debt and
equity offerings and funds generated from operations. In March 1998, the Company
received net proceeds of approximately $5,583,000 from the completion of its
initial public offering. In connection with the completion of the initial public
offering, $9,520,000 in aggregate principal amount of the Company's 14%
convertible subordinated debentures were automatically converted into 2,380,000
outstanding shares of Common Stock and all classes of the Company's preferred
stock were automatically converted into an aggregate of 1,482,766 outstanding
shares of Common Stock. Additionally, the Company utilized $2,524,000 of the net
proceeds to repay certain notes payable.

                                       13
<PAGE>

     On October 13, 1998, the Company entered into a $10 million revolving
credit facility with Comerica Bank (the "Credit Facility"). At July 31, 1999,
$7,435,000 was outstanding under the Credit Facility and an additional $400,000
was available to the Company pursuant to the available borrowing base. The
Credit Facility bears interest at either (i) the prevailing prime rate plus
0.75%, which was 8.75% at July 31, 1999, or (ii) the prevailing LIBOR rate plus
3.35%, and matures on October 13, 2001. Amounts available under the Credit
Facility are limited to certain percentages of pawn loans, inventories, and pawn
service charges receivable. The Credit Facility is collateralized by
substantially all of the unencumbered assets of the Company. Under the terms of
the 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 and covenants as of July 31, 1999. The
Company is required to pay an annual commitment fee of 1/2 of 1% on the average
daily unused portion of the Credit Facility commitment. The Company is
prohibited from paying cash dividends or acquiring treasury stock under the
terms of the Credit Facility.

     On March 11, 1999, the Company commenced a public offering of up to $10
million in principal amount of the 2004 Notes. The 2004 Notes are being offered
on a "best efforts" basis by participating NASD Broker-Dealers. Interest on the
2004 Notes is payable monthly commencing with the second full calendar month
following issuance. At the option of the Company, the 2004 Notes may be redeemed
prior to December 31, 2004 at stipulated redemption prices. The Company had
issued a total of $5,063,000 and $5,916,000 of the 2004 Notes as of July 31,
1999 and September 13, 1999, respectively.

     On September 1, 1999, the Company sold 416,667 shares of 8% Convertible
Preferred Stock, $6.00 par value per share for $2,500,000. The Preferred Stock
bears dividends at 8% per annum and is payable quarterly in cash. The Preferred
Stock is not convertible into the Company's common stock until March 1, 2001.
From March 1, 2001 until August 31, 2002, the Preferred Stock is convertible at
the option of the purchaser at the lesser of (i) 80% of the average closing
sales price of the Company's common stock for the preceding 25 trading days as
quoted on the NASDAQ market or (ii) $6.00 per share. After August 31, 2002, the
Preferred Stock is convertible at the option of the purchaser at 66 2/3% of the
average closing sales price of the Company's common stock for the preceding 25
trading days as quoted on the NASDAQ market. The Company may redeem the
Preferred Stock, in whole or in part, prior to August 31, 2002 at 120% of the
par value of Preferred Stock then outstanding. After August 31, 2002, the
Company may redeem the Preferred Stock, in whole or in part, at 100% of the par
value of the Preferred Stock then outstanding. Each share of the Preferred Stock
shall be entitled to one vote per share, voting together with the holders of the
Company's common stock, on all matters submitted to a vote of stockholders. In
connection with the sale of the Preferred Stock, the Company issued 312,500
warrants exercisable to purchase shares of the Company's common stock through
August 31, 2004 at $5.00 per share and 90,000 warrants exercisable to purchase
shares of the Company's common stock through August 31, 2004 at $3.60 per share.

     At July 31, 1999, the Company's primary sources of liquidity were $646,000
in cash and cash equivalents, $706,000 in pawn service charges receivable,
$6,391,000 in pawn loans outstanding, $5,254,000 in inventories, and $400,000 of
available and unused funds under the Company's Credit Facility. The Company had
a current ratio of approximately 12.1 to 1.0 and 5.8 to 1.0 at July 31, 1999 and
January 30, 1999, respectively. Net cash used in operating activities was
$3,734,000 during the Six Month 1999 Period and $1,769,000 during the Six Month
1998 Period.

     The addition of Michael D. Record as President in September 1998 resulted
in a renewed focus on the Company's lending operations. As of July 31, 1999,
total pawn loans were $6,391,000, a 164.1% increase over the prior year, and
Comparable Store pawn loans were $4,649,000, a 92.1% increase over prior year.
The Company expects pawn loan balances to continue to increase during the fiscal
year ending January 29, 2000 and plans to fund such growth with cash flows from
operations, borrowings under the Credit Facility, net proceeds provided by a
public debt offering of the 2004 Notes, and net proceeds provided by the
issuance of Preferred Stock.

                                       14
<PAGE>

     The Company believes its planned roll-out of PAWNMART-SM- stores will be
funded by borrowings under the Credit Facility, cash flows generated from its
established stores, net proceeds from the offering of the 2004 Notes, net
proceeds from the issuance of the Preferred Stock, and future debt or equity
offerings. The Company's remaining store expansion during Fiscal 1999 will
largely be dependent upon the amount of 2004 Notes sold. In the event the
Company is unable to sell the maximum subscription or additional financing
alternatives are not obtained, its planned Fiscal 1999 expansion schedule is
likely to be reduced or modified. No assurance can be made that the Company
will be able to sell the maximum subscription of 2004 Notes or obtain
additional financing.

YEAR 2000 COMPLIANCE

     The Year 2000 problem concerns the inability of information systems to
properly recognize date-sensitive information beyond December 31, 1999.

     The Company is nearing completion of a project to bring its software and
systems into Year 2000 compliance in time to minimize any significant or
detrimental effects on its operations. The project covers information systems,
operating systems, other non-financial systems equipment and significant
third-party vendors. The Company has adopted a five level process toward Year
2000 compliance: (1) awareness; (2) assessment (identification of where failures
may occur, solutions, workarounds, and plans to repair or replace); (3)
renovation (repair, replace or retire systems that cannot properly process Year
2000 dates); (4) validation; and (5) implementation. At July 31, 1999, the first
four levels have been substantially completed, except for third parties as
discussed below. The Company expects to complete the remaining level by October
31, 1999.

     The Company is applying the five level process to both its information
technology ("IT") systems and non-IT systems. Computer equipment and software
commonly thought of as IT systems include point-of-sale, accounting, data
processing, telephone and other miscellaneous systems. Non-IT systems include
alarm systems, security observation equipment, HVAC units, fax machines, and
other miscellaneous systems. The Company believes that it has identified the
internal business systems that are susceptible to system failures or processing
errors as a result of the Year 2000 problem.

     The Company's proprietary operating software system represents its only
critical internal business system. The proprietary operating software system has
been upgraded for Year 2000 compliance and is being tested. The vendors which
supply the Company's accounting applications, payroll, and other financial
software systems have represented that their products are Year 2000 compliant.
The Company has upgraded substantially all of its hardware to mitigate Year 2000
problems from affecting its operations and anticipates incurring approximately
$25,000 during the remaining portion of the fiscal year ending January 29, 2000
to bring existing hardware into compliance.

     The Company is continuing to review the critical third parties which
provide services or goods which are essential to its operations in order to
determine the extent to which the Company is subject to any failure by such
third parties to adequately address and resolve their respective Year 2000
problems. These third parties include financial institutions, utility suppliers,
and providers of communication services and equipment. In the event that the
Company is unable to obtain satisfactory assurance that a critical third party
provider has achieved Year 2000 compliance, and the Company is unable to replace
the provider with an alternative provider, its operations could be adversely
impacted.

     Based on the current status of the five level Year 2000 process, the
Company does not foresee significant risks associated with the Year 2000
problem. However, management believes that it is not possible to determine with
complete certainty that all Year 2000 problems have been identified or will be
corrected. With this in mind, management is developing contingency plans for
implementation in the event a significant third party vendor does not adequately
address the Year 2000 problem or unexpected problems occur in the Company's
operations. These plans primarily involve using backup sites, alternative
vendors or internal remediation. In the event of a Year 2000 problem, the
Company could likely suffer a number of operational inconveniences and
inefficiencies for both the Company and its customers that could divert
management's time and attention and financial and human resources from its
ordinary business activities.

                                       15
<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's primary market risk exposure relates to changes in interest
rates related to its long-term notes payable. The Company's revolving line of
credit with Comerica Bank bears interest at a variable rate that is frequently
adjusted on the basis of market rate changes and is equal to rates available for
debt with similar characteristics. Accordingly, management believes that the
carrying value of such debt approximates its fair value. The 2004 Notes bear
interest at a fixed rate of 12% per annum. As a result, the Company's only
interest rate risk is the opportunity loss associated with this debt should
interest rates decline for debt with similar characteristics. The aggregate
maturities of long-term notes payable as of July 31, 1999 are as follows:

<TABLE>
<CAPTION>

               Fiscal Years Ending January,
               <S>                               <C>

                            2000                 $            63
                            2001                              -
                            2002                           7,435
                            2003                              -
                            2004                              -
                            2005                           5,027
                                                    -----------------
                            Total                $        12,525
                                                    -----------------
                                                    -----------------

</TABLE>

     The carrying amount of all other financial instruments included in the
Company's consolidated balance sheets approximate fair value due to the short
maturity of these instruments.

                          PART II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS - None

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS - None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES - None

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

       The Company's Annual Meeting of Stockholders was held on June 22, 1999 in
Fort Worth, Texas. Of the 7,209,445 shares outstanding as of the record date,
4,343,034 shares were present or represented by proxy at the meeting. The
following matters were submitted to a vote of the security holders:

     (1) To elect the following to serve as Class II directors for terms
         expiring in 2002:

<TABLE>
<CAPTION>

                                           VOTES FOR           VOTES ABSTAINING
                                           ---------           ----------------
          <S>                              <C>                 <C>
          Robert D. Bourland, Jr.          4,256,281                86,753
          James E. Berk                    4,256,281                86,573

</TABLE>

     (2) To ratify the Company's appointment of KPMG LLP as independent
         auditors for the fiscal year ending January 29, 2000:

<TABLE>
          <S>                                                    <C>
          Votes for:                                             4,300,256
          Votes abstaining:                                         42,778

</TABLE>

ITEM 5.       OTHER INFORMATION - None

                                       16
<PAGE>

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

<TABLE>
<CAPTION>

   Exhibit
   Number
   ------
   <S>      <C>

     3.1    PawnMart, Inc.'s Restated and Amended Certificate of Incorporation (1)

     3.2    PawnMart, Inc.'s Second Amended and Restated Bylaws (1)

     4.1    Specimen Common Stock Certificate (2)

     4.2    Specimen Series A Warrant Certificate (2)

     4.3    Specimen Series B Warrant Certificate (2)

     4.4    Form of Warrant Agreement, dated as of March 20, 1998 between
            PawnMart, Inc. and Continental Stock Transfer & Trust Company (2)

     4.5    Form of National Association of Securities Dealers, Inc. broker-
            dealer warrants (3)

     4.6    Form of Amendment to Warrant Agreement, Dated as of March 20, 1998
            Between PawnMart, Inc. and Continental Stock Transfer & Trust
            Company (6)

     4.7    Indenture, Dated as of March 15, 1999 Between PawnMart, Inc. and
            Trust Management, Inc., as Trustee, Relating to PawnMart, Inc.'s
            12% Subordinated Notes Due 2004 (6)

     4.8    Form of 12% Subordinated Note Due 2004 (included as part of Exhibit
            4.7 hereto)

     4.9    Form of Broker-Dealer Selling Agreement (6)

     4.10   Form of Subscription Escrow Agreement dated March 15, 1999 Between
            PawnMart, Inc., Massie Capital, Ltd. and Norwest Bank Texas, N.A. (7)

     4.11   Certificate of Designations of the 8% Convertible Preferred Stock (8)

     4.12   8% Convertible Preferred Stock and Warrant Purchase Agreement, dated
            as of August 19, 1999, by and between PawnMart, Inc. and Jesse L.
            Upchuch, Trustee of Trust C of the Constance J. Upchurch Family
            Trust Dated 10/14/94 (8)

     4.13   Purchaser Warrant Agreement, dated as of September 1, 1999, by and
            between PawnMart, Inc. and Jesse L. Upchuch, Trustee of Trust C of
            the Constance J. Upchurch Family Trust Dated 10/14/94 (8)

     4.14   Registration Rights Agreement, dated as of September 1, 1999, by and
            between PawnMart, Inc. and Jesse L. Upchuch, Trustee of Trust C of
            the Constance J. Upchurch Family Trust Dated 10/14/94 (8)

     4.15   Transaction Warrant Agreement, dated as of September 1, 1999, by and
            between PawnMart, Inc. and Andrew Garrett, Inc. (8)

     10.1   Form of Indemnity Agreement with Officers and Directors of PawnMart,
            Inc. (2)

     10.2   1997 PawnMart, Inc. Employee Stock Option Plan (1)

     10.3   1997 PawnMart, Inc. Director Stock Option Plan (2)

     10.4   Revolving Credit Agreement Dated October 13, 1998 Between PawnMart,
            Inc. and Comerica Bank (4)

     10.5   Employment Agreement, Dated as of September 8, 1998, Between
            PawnMart, Inc. and Michael D. Record (5)

     27.1   Financial Data Schedule as of July 31, 1999 (Filed in EDGAR version
            only) (9)

</TABLE>
     ---------------------------
     (1)  Filed as an Exhibit to the registrant's Registration Statement on Form
          SB-2, filed on October 23, 1997 (File No. 333-38597).

     (2)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 2 to Form SB-2, filed on February 9, 1998
          (File No. 333-38597).

     (3)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 3 to Form SB-2, filed on March 11, 1998
          (File No. 333-38597).

     (4)  Filed as an Exhibit to the registrant's Form 10-QSB for the quarter
          ended October 31, 1998, filed on December 14, 1998 (File No. 1-13919).

     (5)  Filed as an Exhibit to the registrant's Registration Statement on Form
          S-1, filed on January 15, 1999 (File No. 333-70635).

     (6)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 1 to Form S-1, filed on February 24, 1999
          (File No. 333-70635).

     (7)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 2 to Form S-1, filed on March 10, 1999
          (File No. 333-70635).

     (8)  Filed as an Exhibit to the registrant's Form 8-K, filed on September
          1, 1999 (File No. 1-13919).

     (9)  Filed herewith.

                                       17
<PAGE>

(b)    REPORTS ON FORM 8-K -

       No reports on Form 8-K were filed by the Company during the quarter ended
July 31, 1999.

                                       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.

<TABLE>

<S>                                 <C>                  <C>                       <C>
By:  /s/ Carson R. Thompson         September 14, 1999   By: /s/ Thomas W. White   September 14, 1999
    -----------------------         ------------------       -------------------   ------------------
Carson R. Thompson                  Date                 Thomas W. White           Date
Chief Executive Officer, Director                        Senior Vice President
and Chairman of the Board                                Chief Financial Officer


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                                       18
<PAGE>

                                       INDEX TO EXHIBITS

<TABLE>
<CAPTION>

   Exhibit
   Number
   ------
   <S>    <C>

     3.1  PawnMart, Inc.'s Restated and Amended Certificate of Incorporation (1)

     3.2  PawnMart, Inc.'s Second Amended and Restated Bylaws (1)

     4.1  Specimen Common Stock Certificate (2)

     4.2  Specimen Series A Warrant Certificate (2)

     4.3  Specimen Series B Warrant Certificate (2)

     4.4  Form of Warrant Agreement, dated as of March 20, 1998 between
          PawnMart, Inc. and Continental Stock Transfer & Trust Company (2)

     4.5  Form of National Association of Securities Dealers, Inc. broker-dealer
          warrants (3)

     4.6  Form of Amendment to Warrant Agreement, Dated as of March 20, 1998
          Between PawnMart, Inc. and Continental Stock Transfer & Trust Company
          (6)

     4.7  Indenture, Dated as of March 15, 1999 Between PawnMart, Inc. and Trust
          Management, Inc., as Trustee, Relating to PawnMart, Inc.'s 12%
          Subordinated Notes Due 2004 (6)

     4.8  Form of 12% Subordinated Note Due 2004 (included as part of Exhibit
          4.7 hereto)

     4.9  Form of Broker-Dealer Selling Agreement (6)

     4.10 Form of Subscription Escrow Agreement dated March 15, 1999 Between
          PawnMart, Inc., Massie Capital, Ltd. and Norwest Bank Texas, N.A. (7)

     4.11 Certificate of Designations of the 8% Convertible Preferred Stock (8)

     4.12 8% Convertible Preferred Stock and Warrant Purchase Agreement, dated
          as of August 19, 1999, by and between PawnMart, Inc. and Jesse L.
          Upchuch, Trustee of Trust C of the Constance J. Upchurch Family Trust
          Dated 10/14/94 (8)

     4.13 Purchaser Warrant Agreement, dated as of September 1, 1999, by and
          between PawnMart, Inc. and Jesse L. Upchuch, Trustee of Trust C of the
          Constance J. Upchurch Family Trust Dated 10/14/94 (8)

     4.14 Registration Rights Agreement, dated as of September 1, 1999, by and
          between PawnMart, Inc. and Jesse L. Upchuch, Trustee of Trust C of the
          Constance J. Upchurch Family Trust Dated 10/14/94 (8)

     4.15 Transaction Warrant Agreement, dated as of September 1, 1999, by and
          between PawnMart, Inc. and Andrew Garrett, Inc. (8)

     10.1 Form of Indemnity Agreement with Officers and Directors of PawnMart,
          Inc. (2)

     10.2 1997 PawnMart, Inc. Employee Stock Option Plan (1)

     10.3 1997 PawnMart, Inc. Director Stock Option Plan (2)

     10.4 Revolving Credit Agreement Dated October 13, 1998 Between PawnMart,
          Inc. and Comerica Bank (4)

     10.5 Employment Agreement, Dated as of September 8, 1998, Between PawnMart,
          Inc. and Michael D. Record (5)

     27.1 Financial Data Schedule as of July 31, 1999 (Filed in EDGAR version
          only) (9)

</TABLE>
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     (1)  Filed as an Exhibit to the registrant's Registration Statement on Form
          SB-2, filed on October 23, 1997 (File No. 333-38597).

     (2)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 2 to Form SB-2, filed on February 9, 1998
          (File No. 333-38597).

     (3)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 3 to Form SB-2, filed on March 11, 1998
          (File No. 333-38597).

     (4)  Filed as an Exhibit to the registrant's Form 10-QSB for the quarter
          ended October 31, 1998, filed on December 14, 1998 (File No. 1-13919).

     (5)  Filed as an Exhibit to the registrant's Registration Statement on Form
          S-1, filed on January 15, 1999 (File No. 333-70635).

     (6)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 1 to Form S-1, filed on February 24, 1999
          (File No. 333-70635).

     (7)  Filed as an Exhibit to the registrant's Registration Statement on
          Amendment No. 2 to Form S-1, filed on March 10, 1999
          (File No. 333-70635).

     (8)  Filed as an Exhibit to the registrant's Form 8-K, filed on September
          1, 1999 (File No. 1-13919).

     (9)  Filed herewith.